Answer the following questions using the information below:
The following information pertains to the January operating budget for Canberra Corporation.
∙ Budgeted sales for January $100 000 and for February $200 000.
∙ Collections for sales are 70% in the month of sale and 30% the next month.
∙ Gross margin is 30% of sales.
∙ Administrative costs are $10 000 each month.
∙ Beginning accounts receivable is $20 000.
∙ Beginning inventory is $14 000.
∙ Beginning accounts payable is $60 000.(All from inventory purchases. )
∙ Purchases are paid in full the following month.
∙ Desired ending inventory is 20% of next month's cost of goods sold (COGS).
-At the end of January,budgeted accounts receivable is:
A)$20 000.
B)$30 000.
C)$60 000.
D)None of these answers are correct.

Question

Quizplus · Accepted Answer

The budgeted sales for January are $100,000, of which 70% will be collected in January and 30% will be collected in February, giving a total of $70,000 collected in January. The total cost of goods sold (COGS) for January is 70% of $100,000, or $70,000, and the gross margin is 30% of sales, or $30,000. The beginning accounts receivable is $20,000, and the collections in January are $70,000, so the accounts receivable at the end of January will be $20,000 + $70,000 - $100,000 = $30,000. Therefore, the correct answer is B) $30,000.

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