Orchard has forecast sales to be $126,000 in February, $144,000 in March, $152,000 in April, and $142,000 in May. The average cost of goods sold is 70% of sales. All sales are made on credit and sales are collected 60% in the month of sale, and 40% the month following. What is the budgeted Accounts Receivable balance on May 31?
Answer: budgeted Accounts Receivable balance on May 31 is $ 56,800
Working notes for the above answer is as under
We have been provided with the information that, forecast sales for the month of February to May as follow
| February | March | April | May | |
| Forecasted Sale | 126000 | 144000 | 152000 | 142000 |
All sales are made on credit and sales are collected 60% in the month of sale, and 40% the month following
Now we will calculate the , budgeted Accounts Receivable balance on May 31as follow
| February | March | April | May | June | |
| Forecasted Sale | 126000 | 144000 | 152000 | 142000 | |
| 60% | 75600 | 86400 | 91200 | 85200 | |
| 40% (Previous month sale*40%) |
50400 | 57600 | 60800 | 56800 |
So , budgeted Accounts Receivable balance on May 31 is $ 56,800
