Question

Memphis Company anticipates total sales for April, May, and June of $950,000, $1,050,000, and $1,100,000 respectively. Cash sales are normally 30% of total sales. Of the credit sales, 30% are collected in the same month as the sale, 65% are collected during the first month after the sale, and the remaining 5% are collected in the second month. Compute the amount of accounts receivable reported on the company’s budgeted balance sheet for June 30.

Multiple Choice

• $619,500.

• $967,750.

• $539,000.

• $575,750.

• $1,038,750.
  
  

  Calgary Industries is preparing a budgeted income statement for 2018. Predicted sales for the year are $705,000 and cost of goods sold is 40% of sales. The expected selling expenses are $78,500 and the expected general and administrative expenses are $87,500, which includes $20,500 of depreciation. The company's income tax rate is 30%. The budgeted net income for 2018 is:

  Multiple Choice

• $423,000.

• $179,900.

• $257,000.

• $85,200.

• $77,100.

Answer 1

Accounts receivable at June 30 = 70% of June credit sales + 5% of May credit sales

= ($1,100,000 * 70% * 70%) + ($1,050,000 * 70% * 5%)

= $539,000 + $36,750

= $575,750

-------------------------------------------------

Sales	$705,000
Cost of goods sold	$(282,000) ($705,000*40%)
Gross profit	$423,000
Selling expenses	$(78,500)
General and administrative expenses	$(87,500)
Income before taxes	$257,000
Taxes@30%	$($77,100)
Net income	$179,900