Question

Question 38

The controller of Harrington Company estimates sales and production for the first four months of 2020 as follows:

		January		February		March		April
Sales		$33,000		$40,100		$54,500		$26,100
Production in units		1,100		1,600		2,200		2,600

Sales are 40% cash and 60% on account, and 60% of credit sales are collected in the month of the sale. In the month after the sale, 40% of credit sales are collected. It takes 4 kg of direct materials to produce a finished unit, and direct materials cost $5 per kg. All direct materials purchases are on account, and are paid as follows: 40% in the month of the purchase and 60% the following month. Ending direct materials inventory for each month is 40% of the next month’s production needs.

January’s beginning materials inventory is 980 kg. Suppose that both accounts receivable and accounts payable are zero at the beginning of January.

(a)

	Your answer is correct.

What are the total cash sales for the January–March quarter?

Total cash sales

$

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Attempts: 1 of 2 used

(b)

What is the accounts receivable balance at the end of March?

Accounts receivable balance

$

I don't understand how to do part b

Answer 1

Answer-a)- Total cash sales = $13200+$16040+$21800

= $51040

Explanation-

HARRINGTON COMPANY
Cash Sales
For the three months ending March 31
Particulars	January	February	March
	$	$	$
Projected monthly sales $ (a)	33000	40100	54500
Cash sales (b= 40%*a)	13200	16040	21800

Answer- b)- The accounts receivable balance at the end of the March is =$13080.

Explanation- Accounts receivable balance at the end of the March = March accounts receivable

= ($54500*60%*40%)

= $13080