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Lily Company expects the following total sales: Month Sales March $30,000 April $20,000 May $30,000 June $25,000 The company expects 60% of its sales to be credit sales and 40% for cash. Credit sales are collected as follows: 30% in the month of sale, 70% in the month following the sale. The budgeted accounts receivable balance on May 31 is: A. $12,240 B. $12,600 C. $20,400 D. $21,000

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Tundexi

Answer:

B. $12,600

Explanation:

"The company expects 60% of its sales to be credit sales and 40% for cash"

Credit sale for May = $30,000 * 60%

Credit sale for May = $18,000

"70% of the credit sale is collected in following month of sale"

Accounts receivables on 31 May = 70% of credit sale for May

Accounts receivables on 31 May = 70% * $18,000

Accounts receivables on 31 May = $12,600

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