Question

As of January 1 of the current year, the Gunner Company had accounts receivables of $50,000. The sales for January, February, and March were as follows: $120,000, $140,000, and $150,000, respectively. Of each month's sales, 20% are for cash. Of the remaining 80% (the credit sales), 60% are collected in the month of sale, with the remaining 40% collected in the following month. What is the accounts receivable balance as of March 31?
a. $60,000
b. $48,000
c. $72,000
d. $58,720

Answer 1

Answer:

b. $48,000

Explanation:

According to the given situation the computation of accounts receivable balance is shown below:-

                               Jan                 Feb            Mar              April

Sales               $120,000   $140,000     $150,000

Cash Sales

at 20%                   $24,000     $28,000       $30,000  

Credit Sales

at 80%               $96,000   $112,000       $120,000  

Collection in same

month at 60%        $57,600     $67,200        $72,000

Collection in next

month at 40%       $50,000     $38,400      $44,800         $48,000

Therefore the accounts receivable balance as of March 31 is $48,000