Question

Memphis Company anticipates total sales for April, May, and June of $970,000, $1,070,000, and $1,120,000 respectively. Cash sales are normally 20% of total sales. Of the credit sales, 40% are collected in the same month as the sale, 55% are collected during the first month after the sale, and the remaining 5% are collected in the second month. Compute the amount of accounts receivable reported on the company’s budgeted balance sheet for June 30.

Answer 1

Answer:

The amount of accounts receivable reported on the company’s budgeted balance sheet for June 30 will be $580,400.

Explanation:

The Trade Receivable Budget can be used to calculate the amount of of accounts receivable balance on June 30 as follows

                                                   April              May             June

Balance Brought forward           $0           $465,600    $552,400

Credit Sales  at 80%             $776,000     $856,000    $896,000

Cash Received - 40%           ($310,400)   ($342,400)   ($358,400)

Cash Received - 55%                   $0        ($426,800)   ($470,800)

Cash Received - 5%                     $0                 $0          ($38,800)

Balance Carried forward      $465,600     $552,400    $580,400

Conclusion :

The amount of accounts receivable reported on the company’s budgeted balance sheet for June 30 will be $580,400.