Question

Ratchet Manufacturing anticipates total sales for August, September, and October of $220,000, $230,000, and $240,500 respectively. Cash sales are normally 30% of total sales and the remaining sales are on credit. All credit sales are collected in the first month after the sale. Compute the amount of accounts receivable to be reported on the company's budgeted balance sheet for August.

Answer 1

Answer:

The Accounts Receivables will be reported as $154000 in August's budgeted balance sheet.

Explanation:

The credit sales for August can be calculated by separating the total sales into cash and credit sales.

The cash sales are 30% or total sales which means the remaining 70% belongs ot the credit sales.

The credit sales for August will be = 220000 * 0.7 = 154000

As the question suggests, all credit sales that is $154000 for August will remain as accounts receivables in the month of August and will be collected in September. Thus, in budgeted balance sheet for August, the Accounts receivables will be reported as $154000