Question

Nish’s Products Ltd is trying to forecast Accounts Receivable. On Jan 1, 2016 it has $300 in Accounts Receivable. On average, 30% of sales are collected at the time of sale and 70% are collected the following month. Monthly Sales are provided below.

	2015	2016
	Dec	Jan	Feb	Mar
Sales	$            400	$           350	$           200	$           150
Accounts Receivable (Month Ending Balance)	$            300

The closing balance for Account Receivable at the end of January, February and March respectively are:

		$265, $160, $110
		$265, $160, $125
		$260, $140, $80
		$255, $120, $80

Answer 1

Solution:

Statement showing closing balance of accounts receivable:

Month	Jan	Feb	March
Opening Balance	$300	$265	$160
Add:Credit sales(70% of current month sale)	$245	$140	$105
Less:Received during the month(70% of previous month sale)	$280	$245	$140
Closing Balane	$265	$160	$125

Thus correct answer is $265, $160, $125