Brown Company has prepared the following sales budget, Collections of credit sal

Question

Brown Company has prepared the following sales budget,

Collections of credit sales are 40% in the month of the sale, 50% in the month following the sale, and 10% two months following the sale. Brown's Accounts Receivables as of June 30 are:

The answer is 20,440 , but I don't know how you get to that. If you can provide a detailed explanation, that would be great. Thanks!

Month Cash Sales Credit Sales February $14,000 $28,000 March $12,800 $29,200 April $10,800 $26,400 May $10,000 $24,400 June $13,200 $30,000

Explanation / Answer

Amounts collected in June include:

40% of June sales ($30000*.40) $12,000
50% of May sales ($24400*.50)   $12,200
10% of April sales ($26400*.10) $2,640

total receivables = $26840

ANS : $26840

$20440 is wrong answer

Total January collections: $108,000

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