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22 September, 09:33

Big Wheel, Inc., collects 25% of its sales on account in the month of the sale and 75% in the month following the sale. Sales on account are budgeted to be $150,000 for March and receipts from sales on account total $162,500 in April. What are the budgeted sales on account for April?

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  1. 22 September, 11:48
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    Budgeted Sales on account is $200,000

    Explanation:

    First we will apportion the receipt of march based on their cash receipt

    March

    Total Sales = $150,000

    Cash received in March = $150,000 x 25% = $37,500

    Cash received in April = $150,000 x 75% = $112,500

    March

    Total Cash receipt = $162,500

    Cash Receipt includes the receipts against March sales and April sales.

    Receipts of April Sales = Total receipts - Receipts against March Sale

    Receipts of April Sales = $162,500 - $112,500 = $50,000

    As 25% cash will be received for current month sales. So, $50,000 represents the 25% of the April sale.

    Total Sales = $50,000 / 25% = $200,000
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Home » Business » Big Wheel, Inc., collects 25% of its sales on account in the month of the sale and 75% in the month following the sale. Sales on account are budgeted to be $150,000 for March and receipts from sales on account total $162,500 in April.
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