The following details have been extracted from the receivables records of X: Inv

Question

The following details have been extracted from the receivables records of X: Invoices paid in the month after sale     60% Invoices paid in the second month after sale     20% Invoices paid in the third month after sale      15% Bad debts           5% Credit sales for June to August 2011 are budgeted as follows: June     July    August   $100,000 $150,000 $130,000 Customers paying in the month after sale are entitled to deduct a 2% settlement discount. Invoices are issued on the last day of the month. The amount budgeted to be received in September 2011 from credit sales is: A. $115,190 B. $116,750 C. $121,440 D. $123,000

Explanation / Answer

Answer: OptionC = $121,440

Month Sales September receipt Amount receipt June 100000 15% 15000 July 150000 20% 30000 August 130000 60% 78000 Total 123000 Less: Discount for August receipt ($78,000*2%) = $1,560 1560 Net budgeted receipt 121440

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