Asked by Nolan Blackwell on May 16, 2024
Verified
Lee's Appliances forecasts the following sales figures for the next four months.
Cash sales average 10 per cent of total sales and credit sales are collected 50 per cent in the month of sale and 50 per cent in the month following sale. What is Lee's estimated accounts receivable balance on July 31?
A) $150 000
B) $135 000
C) $75 000
D) $67 500
Accounts Receivable Balance
The total amount of money owed to a company by its customers for goods or services delivered but not yet paid for.
Cash Sales
Transactions where payment is made in cash at the time of purchase, without the use of credit.
- Compute financial figures related to the budget using the provided data and comprehend the consequences of these computations.
Verified Answer
JB
Jirah BernalMay 21, 2024
Final Answer :
D
Explanation :
First, we need to calculate the total credit sales for each month:
- May: $80,000 x 90% = $72,000 total credit sales
- June: $120,000 x 90% = $108,000 total credit sales
- July: $100,000 x 90% = $90,000 total credit sales
- August: $90,000 x 90% = $81,000 total credit sales
Next, we need to calculate the accounts receivable balance for each month:
- May: $72,000 x 50% = $36,000 accounts receivable balance
- June: $108,000 x 50% + $36,000 = $90,000 accounts receivable balance
- July: $90,000 x 50% + $81,000 = $126,000 accounts receivable balance
- August: $81,000 x 50% + $90,000 = $126,000 accounts receivable balance
Therefore, the estimated accounts receivable balance on July 31 is $126,000, which is closest to option D ($67,500).
- May: $80,000 x 90% = $72,000 total credit sales
- June: $120,000 x 90% = $108,000 total credit sales
- July: $100,000 x 90% = $90,000 total credit sales
- August: $90,000 x 90% = $81,000 total credit sales
Next, we need to calculate the accounts receivable balance for each month:
- May: $72,000 x 50% = $36,000 accounts receivable balance
- June: $108,000 x 50% + $36,000 = $90,000 accounts receivable balance
- July: $90,000 x 50% + $81,000 = $126,000 accounts receivable balance
- August: $81,000 x 50% + $90,000 = $126,000 accounts receivable balance
Therefore, the estimated accounts receivable balance on July 31 is $126,000, which is closest to option D ($67,500).
Learning Objectives
- Compute financial figures related to the budget using the provided data and comprehend the consequences of these computations.