Memphis Company anticipates total sales for April, May, and June of $840,000, $9
ID: 2522473 • Letter: M
Question
Memphis Company anticipates total sales for April, May, and June of $840,000, $940,000, and $990,000 respectively. Cash sales are normally 20% of total sales. Of the credit sales, 35% are collected in the same month as the sale, 60% are collected during the first month after the sale, and the remaining 5% are collected in the second month. Compute the amount of accounts receivable reported on the company’s budgeted balance sheet for June 30.
Multiple Choice
$854,400.
$514,800.
$632,800.
$552,400.
$926,400.
Explanation / Answer
Credit sales=(100-20)=80% of total sales
accounts receivable for June 30=5%*May creditsales+(60+5)%of June credit sales
May creditsales=(940000*80%)=$752000
June credit sales=(990,000*80%)=$792000
which is equal to
=(0.05*752000)+(0.65*792,000)
=$552400.