Hi, the question you posted is incomplete, however i have searched for the full question and it reads as follows :
Compton Company expects the following total sales:
Month Sales
March $30,000
April $20,000
May $30,000
June $25,000
The company expects 60% of Its sales to be credit sales and 40% for cash.
Credit sales are collected as follows:
30% in the month of sale, 68% in the month following the sale with the remainder being uncollectible and written off.
Required:
The budgeted Accounts Receivable balance on May 31 is:
Answer:
$13,200
Explanation:
Step 1 : Separate Cash and Credit Sales in the Sales Budget
Sales Budget for the Months ended, March, April and May
March April May June
Sales $30,000 $20,000 $30,000 $25,000
Cash Sales ($12,000) ($8,000) ($12,000) ($10,000)
Credit Sales $18,000 $12,000 $18,000 $15,000
Step 2 : Prepare the Trade Receivable Budget considering credit sales only
Trade Receivable Budget for the Months ended, March, April and May
March April May June
Balance b/d $0 $12,600 $8,760 $13200
Credit Sales $18,000 $12,000 $18,000 $15,000
Collection - 30 % ($5,400) ($3,600) ($5,400) ($4,500)
Collection - 68 % $0 ($12,240) ($8,160) ($12,240)
Balance c/f $12,600 $8,760 $13,200 $11,460
Note :
The Trade Receivable Budget forecasts the amounts that will be owed to a business by credit customers
