Anyone Good at Accounting?

[Jimm]

Ok I am trying to study for my accounting test tomorrow and I've been looking over my quizzes...

There is one problem that I have worked everywhich way that I can think of but just can't seem to figure out how to do it @_@

Anyone know what I am supposed to do here?

Home company will open a new store on Jan 1. Based on experience from its other retail outlets, Home company is making the following sales projections:

Cash Sales     Credit Sales     Total Sales
60,000             40,000           100,000   Jan
30,000             50,000            80,000   Feb
40,000             60,000           100,000   March
40,000             80,000           120,000   April

Home company estimates that 70% of the credit sales will be collected in the month following the month of sale and 30% will be collected in the second month following the month of sale.

The March 31 balance in accounts receivable will be:

The answer is 75,000

I have no idea how to get the answer D:

 

[Sculli]

Home company estimates that 70% of the credit sales will be collected in the month following the month of sale and 30% will be collected in the second month following the month of sale.

The March 31 balance in accounts receivable will be:

The answer is 75,000

I have no idea how to get the answer D:

CS = credit sales

end-of-January A/R = CS_JAN = 40,000
end-of-February A/R = CS_FEB + CS_JAN * 0.3 = 62,000
end-of-March A/R = CS_MAR + CS_FEB * 0.3 = 75,000

The end of month A/R is the sum of the credit sales for that month and 30% of the credit sales of the previous month (since 70% of the credit sales of the previous month have been collected).

 

[Lanien]

Damn, didn't even let me read the thing before you posted Sculli lol

 

[Jimm]

Ahhh ok I see now...I had a feeling it would be something kind of simple like that lol...


Thanks alot Sculli : )

 

[Sculli]

I have found that accounting problems often provide much more information than necessary to solve a problem, which often makes it more complex than it needs to be (I guess that is part of the test).