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Total sales for April, May, and June are $900,000, $700,000, and $850,000 respectively. Cash sales are...

Total sales for April, May, and June are $900,000, $700,000, and $850,000 respectively.
Cash sales are normally 30% of total sales.
Of the credit sales, 40% are collected in the same month as the sale, 55% are collected during the first month after the sale, and the remaining 5% are eventually not collected because of bad debts. All bad debts are written off by the end of the second month after the sale.

Compute the total amount of cash received during June, and the amount of accounts receivable outstanding at the end of June.

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Answer #1

In June total sales = $850,000

Cash sales = 850,000*30%= $255,000

Credit sales = 850000-$255000= $595000

Cash collected from credit sales of June = $595000*40%= $238000

Cash collected from sale of may = $700,000*70%*55%= $269500

Total cash collected in June = $255000+$238000+$269500= $762500

Accounts receivable outstanding will be 60%of credit sale of June and 5 % of the sales of may. Because bad debts will be written off after second month of sale .

$595000*60%= $357000

700000*70%*5%=24500

Total outstanding will be $357000+24500=$ 381500

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