Question

Fortune Inc. has budgeted sales for June and July at $680,000 and $720,000, respectively. Sales are 80% credit, of which 70% is collected in the month of sale and 30% is collected in the following month. What is the accounts receivable balance on July 31?

Answer 1

Answer: $172,800

Explanation:

Accounts receivable balance records those who still owe the company.

July accounts receivable balance = 30% of credit sales in July.

Credit sales in July = 80% * 720,000

= $576,000

Accounts receivable at end of July = 576,000 * 30%

= $172,800