Ross Corporation makes all sales on account. The June 30th balance sheet balance in its accounts receivable is $400,000, of which $240,000 pertain to sales that were made during June. Budgeted sales for July are $1,250,000. Ross collects 70% of sales in the month of sale; 20% in the following month; and the final 10% in the second month after the sale. What are Ross's budgeted collections for July?

Question

Business

Janelle Collier

10 October, 00:38

Ross Corporation makes all sales on account. The June 30th balance sheet balance in its accounts receivable is $400,000, of which $240,000 pertain to sales that were made during June. Budgeted sales for July are $1,250,000. Ross collects 70% of sales in the month of sale; 20% in the following month; and the final 10% in the second month after the sale. What are Ross's budgeted collections for July?

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Answers (1)

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Cheyanne Randall · Answer 1

Ross's budgeted collections for July is $1,195,000

Explanation:

The computation of the budgeted collections for July month is shown below:

July sales = Budgeted sales * collection percentage

= $1,250,000 * 70%

= $875,000

June sales = (Budgeted sales : remaining collection percentage) * collection percentage

= ($240,000 : 30%) * 20%

= $160,000

May sales = Accounts receivable balance - June sales

= $400,000 - $240,000

= $160,000

Now sum up all three months sales

So, the value would be

= $875,000 + $160,000 + $160,00

= $1,195,000