Lakewood Jet Skis has budgeted sales for June and July at and , respectively. Sales are % credit, of which % is collected in the month of the sale and % is collected in the following month. What is the accounts receivable balance on July 31?

Question

Lakewood Jet Skis has budgeted sales for June and July at $420,000 and $480,000, respectively. Sales are 75% credit, of which 40% is collected in the month of sale and 60% is collected in the following month. What is the accounts receivable balance on July 31?

Total cash received in July= $453,000

Explanation:

Cash sales : 25% ×   July sales = 25% × 480,000= 120,000

40% month of sales

40%× 75%× July sales

40%× 75%× 480,000= 144,000

60% following month:

= 60%× 75%× June sales

= 60%× 75%× 420,000 = 189000

Total cash received in July =120,000  + 144,000  +  189,000  =453,000

Total cash received in July= $453,000

Note hat 75% of the total sales is on credit , therefore the balance (25%) would be  represent credit sales

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