Question

Ross Corporation makes all sales on account. The June 30th balance sheet balance in its accounts receivable is $440,000, of which $260,000 pertain to sales that were made during June. Budgeted sales for July are $1,290,000. Ross collects 60% of sales in the month of sale; 15% in the following month; and the final 25% in the second month after the sale.

What are Ross's budgeted collections for July?

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

Answer 1

Answer- Ross's budgeted collections for July are = $1290000*60%+ $260000*15%+ ($440000-$260000)*25%

= $774000+$39000+$45000

= $858000

The budgeted balance of Ross's accounts receivable as of July 31 is = ($1290000*40%)+ ($260000*25%)

= $516000+$65000

= $581000