Question

Carlton has forecast sales to be $205,000 in February, $270,000 in March, $290,000 in April, and $310,000 in May. The average cost of goods sold is 60% of sales.

All sales are made on credit and sales are collected 50% in the month of sale, 30% the month following and the remainder two months after the sale.

What is the budgeted Accounts Receivable balance on May 31?

a)$161.250

b)$267,000

c)$241,500

d)$296,000

Answer 1

Answer:

expected cash collections = $296000

so correct option is d)$296,000

Explanation:

given data

forecast sales February =  $205,000

March = $270,000

April = $290,000

May = $310,000

average cost of goods sold = 60%

to find out

budgeted Accounts Receivable balance on May 31

solution

we get here first Remainder collections that is

Remainder collections = 100% - 50% - 30%

Remainder collections =20%

so expected cash collections in May is here

expected cash collections =(0.5 × May) + (0.3×April) + (0.2 × March)

expected cash collections =(0.5 × 310000) + (0.3×290000) + (0.2 × 270000)

expected cash collections = $296000

so correct option is d)$296,000