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             $ 95,000  February              $15,000             $130,000  March                 $24,000             $ 70,000  April                 $26,000             $120,000  May                   $19,000             $ 90,000  June                  $14,000             $100,000  On average, 45% of the sales on account are collected in the month of sale, 30% are collected in the month following sale, 15% are collected in the second month following sale, and the remaining 10% is collected three months after the month of sale.  Calculate ABC Company's budgeted accounts receivable at June 30.

Explanation / Answer

Budgeted AR at June 30=10%*April credit salescredit sales+25%*May credit sales+55%June credit sales

=(0.1*120,000)+(0.25*90000)+(0.55*100,000)

which is equal to

=$89500.

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