[Asking for a Friend]

Having trouble with finding how to calculate an answer to one of the problems where you must calc AR and would appreciate any input…

Co. starts Jan 1 with 2k in AR. They have credit sales of 2.5k, 3k, 2k for Jan, Feb, Mar respectively. They collect 60% in month of sale and 40% in the following month. What is Mar 31 AR Closing bal?

The 3 months sales seem pretty straight forward, but the Jan 1 beginning bal seems to throw me and I’m not sure how to deal with it. Thanks in advance!

AUD - 77
BEC - 93
FAR - 76
REG - 79

Ninja only - big fan! Work experience helped also. Do some sims and you're crazy not to do official CPA practice exam. My scores weren't great but I always outperformed my trending score. I was 4 for 4 and trying to get done ASAP (done in 6 months), not ace them 🙂

[rubberducky]

Is the correct answer $800? If it is, I got that because at March 31st, the only receivables not collected yet are the 40% of March's sales that will be collected in April ($2,000 x 40%). In this question January's beginning balance is irrelevant because that was all collected throughout the month of January, (It was the 40% of December sales that were to be collected in January.)

[Asking for a Friend]

YES! That is it! I was overthinking this massively. It didn't help that I entered the wrong amount in for March multiple times, but even still I was having more trouble with this than any other problem. Knowing to ignore Jan is helpful – I thought that might be case but was thrown off by it being a higher amount than current months unpaid balances. I adapted it from a sample problem that made the Jan number more out of whack but using your logic quickly provided the right answer.
Was driving me nuts, thank you!

AUD - 77
BEC - 93
FAR - 76
REG - 79

Ninja only - big fan! Work experience helped also. Do some sims and you're crazy not to do official CPA practice exam. My scores weren't great but I always outperformed my trending score. I was 4 for 4 and trying to get done ASAP (done in 6 months), not ace them 🙂

[Author]

Replies