Trumbull Corporation budgeted sales on account of $120,000 for July, $211,000 for August, and $198,000 for September. Experience indicates that none of the sales on account will be collected in the month of the sale, 60% will be collected in the month after the sale, 36% in the second month, and 4% will be uncollectible. The cash receipts from accounts receivable that should be budgeted for September would be:

(A) $147,960

(B) $169,800

(C) $197,880

(D) $194,760

Question

River

Business

14 May, 07:46

Trumbull Corporation budgeted sales on account of $120,000 for July, $211,000 for August, and $198,000 for September. Experience indicates that none of the sales on account will be collected in the month of the sale, 60% will be collected in the month after the sale, 36% in the second month, and 4% will be uncollectible. The cash receipts from accounts receivable that should be budgeted for September would be:

(A) $147,960

(B) $169,800

(C) $197,880

(D) $194,760

+3

Answers (1)

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Rachel Cooke · Answer 1

(B) $169,800

Explanation:

For computing the cash receipts from accounts receivable, the following calculations should be done which is shown below:

= 60% of August sales + 36% of July sales

= 60% * $211,000 + 36% * $120,000

= $126,600 + $43,200

= $169,800

The 4% will be uncollectible, so it will be not be considered in the computation part, and the September sales is ignored.