Question

Required information

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Ross Corporation makes all sales on account. The June 30th balance sheet balance in its accounts receivable is $500,000, of which $280,000 pertain to sales that were made during June. Budgeted sales for July are $1,350,000. Ross collects 65% of sales in the month of sale; 15% in the following month; and the final 20% in the second month after the sale.

1. What are Ross's budgeted collections for July?

Multiple Choice

• $1,139,500

• $963,500

• $1,217,500

• $1,157,500

2. What is the budgeted balance of Ross's accounts receivable as of July 31?

Multiple Choice

• $1,139,500

• $963,500

• $632,500

• $1,157,500

Answer 1

Question 1

Correct answer--------$1,217,500

Working

Collection from May credit sales	(500000-280000)	$      220,000.00
Collection from June credit sales	280000/35 x 15	$      120,000.00
Collection from July credit sales	(1350000 x 65%)	$      877,500.00
Total Collection in July		$ 1,217,500.00

Question 2

Correct answer--------$632,500

Working

Uncollected sales from June	(280000-120000)	$      160,000.00
Uncollected sales from July	(1350000 x 35%)	$      472,500.00
Accounts receivable On July 31		$      632,500.00