Question

A company's accounts receivable balance at the end of December is $44,790, of which 16.20% is uncollected from December sales. The company's credit sales policy is as follows: 52.10% collected in the month of sale, 32.20% collected in the month immediately after the sale, with the remaining balance collected in the second month after the sale. How much were the total sales in November?

Question 6 options:

	$239,070
	$245,047
	$251,024
	$257,000
	$262,977

Answer 1

Closing Balance of Accounts Receivable as at end of December = $ 44790

As per company policy,  credit sales policy is as follows: 52.10% collected in the month of sale, 32.20% collected in the month immediately after the sale, with the remaining balance collected in the second month after the sale; Remaining balance is 15.70%

Hence, the above closing balance should ideally consist of balances pertaining to Dec sales and 15.70% of November Sales;

It is already given that the balance of $ 44790 includes 16.20% of December Sales;

Hence, $ 44790 * (1-16.20%) = $ 37534; This is the 15.70% portion of November Sales;

Hence, November Sales = 37524 / 15.70% = $ 239070

Answer: $ 239070 Total Sales of November