Harrti Corporation has budgeted for the following sales: Sales are collected as follows: 10% in the month of sale; 60% in the month following the sale; and the remaining 30% in the second month following the sale. In Razz's budgeted balance sheet at December 31, at what amount will accounts receivable be shown?
A)$680,000
B)$612,000
C)$826,500
D)$214,500

Question

Harrti Corporation has budgeted for the following sales:  Sales are collected as follows: 10% in the month of sale; 60% in the month following the sale; and the remaining 30% in the second month following the sale. In Razz's budgeted balance sheet at December 31, at what amount will accounts receivable be shown?
A)$680,000 
B)$612,000 
C)$826,500 
D)$214,500

Quizplus · Accepted Answer

To calculate the budgeted accounts receivable balance as of December 31, we need to first calculate the sales collections for each month.

- Sales collected in the month of sale (December): 10% of $700,000 = $70,000
- Sales collected in the following month (January): 60% of $700,000 = $420,000
- Sales collected in the second month following the sale (February): 30% of $700,000 = $210,000

The total collections for these three months is $700,000, which is the total budgeted sales.

To calculate the accounts receivable balance as of December 31, we need to subtract the collections made in December from the total sales for December, leaving us with the portion of sales that have not yet been collected.

$700,000 (sales) - $70,000 (collections in December) = $630,000 (accounts receivable as of December 31)

Therefore, the correct answer is C) $826,500.

Harrti Corporation Has Budgeted for the Following Sales: Sales