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Razz Company is estimating the following sales:

July August September October November December $45,000 $50,000 $65,000 $80,000 $75,000 $60,000

Sales at Razz are normally collected as follows:

  • 10% in the month of sale
  • 60% in the month following the sale
  • and the remaining 30% in the second month following the sale.

In Razz's budgeted balance sheet at November 30, at what amount will accounts receivable be shown?

Hint: Some of October sales were collected in October and some of October sales were collected in November. What is left uncollected? Use the same logic for November sales. AR is the amount still uncollected at November 30.

Round your final answer to the nearest dollar, if needed. Do not include any commas, dollar signs, negative signs, or periods in your answer.

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Answer #1

ANSWER:

At November 30,

Accounts receivable = uncollected sales of october + uncollected sales of november

= (80000 x 30%) + (75000 x 90%)

= 24000 + 67500

= 91500

Therefore,

At November 30, accounts receivable balance would be shown 91500.

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