McLeod Fries, Inc. has budgeted sales for June and July at $670,000 and $770,000, respectively. Sales are 85% credit, of which 60% is collected in the month of sale and 40% is collected in the following month. What is the budgeted Accounts Receivable balance on July 31? $308,000 $261,800 $227,800 $654,500

Question

Business

Pamela Pitts

21 August, 23:59

McLeod Fries, Inc. has budgeted sales for June and July at $670,000 and $770,000, respectively. Sales are 85% credit, of which 60% is collected in the month of sale and 40% is collected in the following month. What is the budgeted Accounts Receivable balance on July 31? $308,000 $261,800 $227,800 $654,500

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Jaylah Leblanc · Answer 1

Account receivable on July 31 = $261,800

Explanation:

We would not be making use of the information for June as the question says 60% is collected in the month of sale and 40% is collected in the following month. Therefore as at July 31, all of june sales would have been collected and won't be outstanding

July credit sales = 85% * $770,000 = $654,500

Collected in July (60%) = 60% * $654,500 = $392,700

Receivable as at 31 July = $654,500 - $392,700 = $261,800