Shown below are the budgeted sales for ABC Company for the next six months: Sale

Question

Shown below are the budgeted sales for ABC Company for the next six months: Sales for Cash Sales on Account January $18,000 $ 70,000 February $15,000 $ 90,000 March $24,000 $120,000 April $19,000 $100,000 May $26,000 $130,000 June $14,000 $ 95,000 On average, 30% of the sales on account are collected in the month of sale, 40% are collected in the month following sale, 10% are collected in the second month following sale, and the remaining 20% is collected three months after the month of sale. Calculate ABC Company's budgeted accounts receivable at June 30.

Explanation / Answer

So, total receivable at June 30 = $125,500

1st month 2nd month 3rd month 4th month Total 30% 40% 10% 20% 100% Month Sales on Account January Collection February Collection March Collection April Collection May Collection June Collection Total Collection Balance January 70000 21000 28000 7000 14000 70000 0 February 90000 27000 36000 9000 18000 90000 0 March 120000 36000 48000 12000 24000 120000 0 April 100000 30000 40000 10000 80000 20000 May 130000 39000 52000 91000 39000 June 95000 28500 28500 66500 Total Receivable 125500

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