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ABC, Inc., has a beginning receivables balance on January 1st of $680. Sales for January through...

ABC, Inc., has a beginning receivables balance on January 1st of $680. Sales for January through April are $440, $470, $550 and $570, respectively. The accounts receivable period is 60 days. How much did the firm collect in the month of March? Assume that a year has 360 days.

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Answer #1

It is given that accounts receivable are for 60 days, which means sales proceeds are only collected from debtors after a period of 60 days (which is 2 months).

So the following can be concluded:-

Sales for the month of January, would be realized in the month of March

Sales for the month of February, would be realized in the month of April

And so on and so forth.

Therefore Collection for the month of March = Sales for the month of January = $440

Note:- The beginning balance (as given) as on 1st January are of sales of previous months and will be realized within 2 months of sales which is before March. Hence no porceeds of such begining accounts receivable balance would be realized in March.

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