Question

Gardner Company expects sales for October of $249,000. Experience suggests that 45% of sales are for cash and 55% are on credit. The company collects 50% of its credit sales in the month of sale and 50% in the month following sale. Budgeted Accounts Receivable on September 30 is $67,500. What is the amount of Accounted Receivables on the October 31 budgeted balance sheet

Answer 1

Answer:

$68,475

Explanation:

Data provided

Sales in October = $249,000

Credit percentage = 55%

Following month percentage = 50%

The calculation of accounts receivable is shown below:-

Credit sales in October = $249,000 × 55%

= $136,950

Collection collected in October

= $136,950 × 50%

= $68,475

Therefore, for computing the collection collected in October we simply multiply the credit sales in October with following month percentage.