Question

Enterprises was organized on July 1, 2019. Projected Sales for each of the first four months of operations are as follows:

	July	August	September	October
Sales (in dollars)	120,000	160,000	200,000	210,000

The company expects to sell 20% of its merchandise for cash. Of sales on account, 30% are expected to be collected in the month of the sale, 50% in the month following the sale, and the remainder in the second month following the sale.

Compute the budgeted amount of accounts receivable at the end of August.

Group of answer choices

$195,200

$108,800

$227,200

$41,600

Answer 1

Particulars	July	August
Sales	$120,000	$160,000
- Cash Sales   - 20%	$24,000 ($120,000 x 20%)	$32,000 ($160,000 x 20%)
- Credit sales - 80%	$96,000 ($120,000 x 80%)	$128,000 ($160,000 x 80%)
Collections:
- In same month     - 30%	$28,800 ($96,000 x 30%)	$38,400 ($128,000 x 30%)
- In following Month   - 50%	-	$ 48,000 ($96,00 x 50%)
Total		$86,400
Previous month Balance to be Received	-	$67,200
Balance to be Received	$67,200 ($96,000 (-) $28,800)	$108,800 ($128,000 + $67,200 (-) $86,400)
Option - B is correct   - $108,800