Kingston anticipates total sales for June and July of $420,000 and $398,000, res

Question

Kingston anticipates total sales for June and July of $420,000 and $398,000, respectively. Cash sales are Qs 20-22 mmally 60% of total sales. Of the credit sales, 20% are collected in the same month as the sale, 70% are computing budg collected during the first month after the sale, and the remaining 10% are collected in the second month accounts receive fter the sale. Determine the amount of accounts receivable reported on the company's budgeted balance P2 leet as of July 31. tihecounts receivable eported on the

Explanation / Answer

Answer)

Accounts receivable of Kingston:

Accounts receivable for the month of july:

Credit sales for month of June:Total sales×(1-60%)

=$420000×40%=$168000

Receivables still remaining for second month after sales:

$168000×10%=$16800(A)

Credit sales for the month of July:

$398000×40%=$159200

Amount collected:$159200×20%=$31840

Account receivable to be collected after the month of sale=

$159200-$31840=$127360(B)

Total accounts receivables of Kingston on July 31:(A+B)

=$16800+$127360=$144160

Cash payments for the month of September:

Cash payments of august Payable in september:

$600000×75%=$450000(A)

Cash payments for month of sepSeptem payable in September:

$720000×25%=$180000(B)

Total cash payments :(A+B)

$450000+$180000=$630000

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