Vaughn Manufacturing reported the following information for 2016: October November December Budgeted sales $1000000 $940000 $1150000 All sales are on credit. Customer amounts on account are collected 50% in the month of sale and 50% in the following month. How much is the November 30, 2016 budgeted Accounts Receivable?

The answer is : $970,000

Explanation:

To calculate this, we have to calculate the amounts collected from the month of sale (November) and the amount receivable from the other months and add them together. This is shown below as follows:

From October sales ($1000000) : 50% is collected in the following month (October)

∴ 50% of 1,000,000 = 0.5 * 1,000,000 = $500,000

From November sales (940,000) : 50% receivable in the month of sale

= 50% of 940,000 = $470,000

Therefore Accounts receivable at the end of November

= 470,000 + 500,000 = $970,000