Lakewood Jet Skis has budgeted sales for June and July at $490,000 and $480,000, respectively. Sales are 75% credit, of which 30% is collected in the month of the sale and 70% is collected in the following month. What is the accounts receivable balance on July 31?

Question

Business

Shaun Nixon

30 August, 07:12

Lakewood Jet Skis has budgeted sales for June and July at $490,000 and $480,000, respectively. Sales are 75% credit, of which 30% is collected in the month of the sale and 70% is collected in the following month. What is the accounts receivable balance on July 31?

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Eileen Ware · Answer 1

The accounts receivable balance at July 31 is $252000

Explanation:

To calculate the balance of accounts receivable at the end of July, we need yo find out the credit sales for July.

Credit Sales - July = Total sales for July * percentage of sales on credit

Credit Sales - July = 480000 * 0.75 = 360000

Out of this, 30% will be collected in the month of July. thus, the accounts receivables balance at July 31 will be 70% of 360000.

Accounts Receivable balance at July 31 = 360000 * 0.7 = $252000