(Appendix 10A)Taft Corporation collects cash from customers as follows: 60% in the month of sale, 20% in the month after sale, 19% in the second month after sale, and 1% is never collected. Bad debts are written off annually in December. Budgeted sales are all on credit and amount to: May $600,000
June 700,000
July 500,000
August 600,000
What is the budgeted amount of accounts receivable at the end of August?
A)$353,000
B)$340,000
C)$329,000
D)$377,000

Question

Quizplus · Accepted Answer

The budgeted amount of accounts receivable at the end of August is $353,000. This is calculated as follows:May sales: $600,000 x 60% = $360,000June sales: $700,000 x 60% = $420,000July sales: $500,000 x 60% = $300,000August sales: $600,000 x 60% = $360,000Total collections in August: $360,000 + $420,000 + $300,000 + $360,000 = $1,440,000Accounts receivable at the end of August: $1,440,000 - $1,087,000 = $353,000

(Appendix 10A)Taft Corporation Collects Cash from Customers as Follows: 60