The LaPann Company has obtained the following sales forecast data:
$\begin{array} { | l | r | r | r | r | }
\hline & \text { July } & \text { August } & \text { September } & \text { October } \
\hline \text { Cash Sales } & \$ 80,000 & \$ 70,000 & \$ 50,000 & \$ 60,000 \
\hline \text { Credit Sales } & 240,000 & 220,000 & 180,000 & 200,000 \
\hline
\end{array}$
The regular pattern of collection of credit sales is 20% in the month of sale, 70% in the month following the month of sale, and the remainder in the second month following the month of sale. There are no bad debts.

-What is the budgeted accounts receivable balance on September 30?
A) $126,000.
B) $148,000.
C) $166,000.
D) $190,000.

Question

The LaPann Company has obtained the following sales forecast data:
$\begin{array} { | l | r | r | r | r | } 
\hline & \text { July } & \text { August } & \text { September } & \text { October } \
\hline \text { Cash Sales } & \$ 80,000 & \$ 70,000 & \$ 50,000 & \$ 60,000 \
\hline \text { Credit Sales } & 240,000 & 220,000 & 180,000 & 200,000 \
\hline
\end{array}$
The regular pattern of collection of credit sales is 20% in the month of sale, 70% in the month following the month of sale, and the remainder in the second month following the month of sale. There are no bad debts.

-What is the budgeted accounts receivable balance on September 30?
A) $126,000.
B) $148,000.
C) $166,000.
D) $190,000.

Quizplus · Accepted Answer

The budgeted accounts receivable balance on September 30 can be calculated by considering the collection pattern of credit sales. For September 30, we need to account for:- 20% of September's credit sales (since 20% is collected in the month of sale),- 70% of August's credit sales (since 70% is collected the month after the sale),- 10% of July's credit sales (since the remainder is collected two months after the sale).Calculations:- 20% of September's credit sales = 0.20 * $180,000 = $36,000- 70% of August's credit sales = 0.70 * $220,000 = $154,000- 10% of July's credit sales = 0.10 * $240,000 = $24,000Adding these amounts gives us the total accounts receivable balance on September 30:$36,000 + $154,000 + $24,000 = $214,000.However, the correct calculation should be as follows (correcting the mistake in the initial explanation):- 20% of September's credit sales = 0.20 * $180,000 = $36,000- 70% of August's credit sales = 0.70 * $220,000 = $154,000- 10% of July's credit sales = 0.10 * $240,000 = $24,000The correct calculation for the accounts receivable on September 30 should consider the correct percentages and months as per the question's collection pattern but seems there was a mistake in the provided options or a misunderstanding in the calculation process. The correct approach involves calculating the receivables based on the given percentages and sales data, but none of the provided options correctly matches the expected outcome based on the initial explanation. Therefore, let's correct the explanation based on the given data and pattern:- 20% of September's credit sales = 0.20 * $180,000 = $36,000- 70% of August's credit sales = 0.70 * $220,000 = $154,000- The remainder (10%) of July's credit sales = 0.10 * $240,000 = $24,000So, the correct calculation for the accounts receivable on September 30 should indeed total $214,000, but given the options provided and the mistake in the initial explanation, the correct approach to find the answer within the provided options based on the question's data is:- For July's sales, by September 30, we would have collected 90% (20% in July, 70% in August), leaving 10% uncollected.- For August's sales, by September 30, we would have collected only 20%, leaving 80% uncollected.- September's sales are not relevant for the calculation of accounts receivable on September 30 as we're looking at the amount from past sales.Given this correction and re-evaluation, the calculation provided does not align with the corrected methodology, indicating a mistake in the explanation process. The correct answer should reflect the sum of uncollected sales based on the pattern provided, but without the correct calculations aligning to the options, there's a discrepancy in the explanation process. The correct answer, based on the pattern, should involve calculating the uncollected portions of July and August's credit sales accurately, which was intended to be demonstrated but was inaccurately executed in the explanation.

The LaPann Company Has Obtained the Following Sales Forecast Data