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:

a) 48,480

b) 20,440

c) 18,000

d) 12,000

I already asked this question saying that the answer is B, and it still is. An "expert" said that is wrong, but the textbook says it's B. The answer it provides is (30,000 x 0.6) + (24,400 x 0.1), but I don't understand how you get to that. If you can explain it by also providing an equation, 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

Calculate account receivable in june 30:

June sales account receivable = (30000*60%) = 18000

May sales account receivable = (24400*10%) = 2440

June 30 Account receivable = 18000+2440 = 20440

so answer is b) $20440

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