Question

Harrti Corporation has budgeted for the following sales:

July	$	446,600
August	$	581,600
September	$	615,800
October	$	890,800
November	$	738,000
December	$	698,000

Sales are collected as follows: 15% in the month of sale; 65% in the month following the sale; and the remaining 20% in the second month following the sale. In Harrti's budgeted balance sheet at December 31, at what amount will accounts receivable be shown?

Answer 1

Accounts receivable on 31st December = 738000*20% + 698000*85%

= $740, 900

Answer 2

To calculate the accounts receivable balance on the balance sheet at December 31, we need to determine the amounts of sales that have not yet been collected as of that date.

Sales for each month:

• July: $446,600

• August: $581,600

• September: $615,800

• October: $890,800

• November: $738,000

• December: $698,000

For July sales, 15% is collected in July, 65% is collected in August, and 20% is collected in September:

• July sales: $446,600

• July collections: 15% x $446,600 = $66,990

• August collections: 65% x $446,600 = $290,290

• September collections: 20% x $446,600 = $89,320

• Uncollected July sales: $446,600 - $66,990 - $290,290 - $89,320 = $0

For August sales, 15% is collected in August, 65% is collected in September, and 20% is collected in October:

• August sales: $581,600

• August collections: 15% x $581,600 = $87,240

• September collections: 65% x $581,600 = $377,990

• October collections: 20% x $581,600 = $116,320

• Uncollected August sales: $581,600 - $87,240 - $377,990 - $116,320 = $0

For September sales, 15% is collected in September, 65% is collected in October, and 20% is collected in November:

• September sales: $615,800

• September collections: 15% x $615,800 = $92,370

• October collections: 65% x $615,800 = $400,270

• November collections: 20% x $615,800 = $123,160

• Uncollected September sales: $615,800 - $92,370 - $400,270 - $123,160 = $0

For October sales, 15% is collected in October, 65% is collected in November, and 20% is collected in December:

• October sales: $890,800

• October collections: 15% x $890,800 = $133,620

• November collections: 65% x $890,800 = $579,020

• December collections: 20% x $890,800 = $178,160

• Uncollected October sales: $890,800 - $133,620 - $579,020 - $178,160 = $0

For November sales, 15% is collected in November, 65% is collected in December, and 20% is collected in January:

• November sales: $738,000

• November collections: 15% x $738,000 = $110,700

• December collections: 65% x $738,000 = $479,700

• January collections: 20% x $738,000 = $147,600

• Uncollected November sales: $738,000 - $110,700 - $479,700 - $147,600 = $0

For December sales, 15% is collected in December, 65% is collected in January of the following year, and 20% is collected in February of the following year:

• December sales: $698,000

• December collections: 15% x $698,000 = $104,700

• January collections: