Question

Ross Corporation makes all sales on account. The June 30th balance sheet balance in its accounts receivable is $390,000, of which $240,000 pertain to sales that were made during June. Budgeted sales for July are $1,240,000. Ross collects 75% of sales in the month of sale; 10% in the following month; and the final 15% in the second month after the sale.

Part 1: What are Ross's budgeted collections for July?

Part 2: What is the budgeted balance of Ross's accounts receivable as of July 31?

Please show all steps to solve and explain, no handwritten or photo answers as I cannot read them. Thank you.

Answer 1

May Sales collection ($390,000-$240,000)	$     150,000
June sales collection ($240,000/25%*10%)	$        96,000
July sales collection ($1,240,000*75%)	$     930,000
Total collection in July month	$ 1,176,000

Opening balance	$       390,000
Add: July month sales	$   1,240,000
Less: Collected in July	$ (1,176,000)
Accounts receivable as of July 31	$       454,000

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