Sales Projection and Accounts Receivable Balance Calculation

What are the budgeted sales for June and July? How much of the sales are credit sales?

June budgeted sales: $680,000

July budgeted sales: $765,000

Credit sales percentage: 85%

Answer:

The budgeted sales for June and July are $680,000 and $765,000, respectively. 85% of the sales are credit sales.

For the month of June, Kuzma Foods, Inc. has budgeted sales totaling $680,000. In July, the projected sales amount increases to $765,000. The majority of these sales, 85% to be exact, are credit sales. This means that customers make purchases on credit and are allowed to pay at a later date.

With credit sales, a portion of the amount is collected in the month of the sale, and the remaining portion is collected in the following month. In this case, 70% of the credit sales amount is collected in the month of the sale, while the remaining 30% is collected in the following month.

The budgeted Accounts Receivable balance on July 31 can be calculated by multiplying the July budgeted sales by the credit sales percentage and the following month collection percentage. By following this formula, the Accounts Receivable balance is projected to be $195,075 on July 31.