The Deluxe Corporation has a 45 day accounts receivable period. The estimated quarterly sales for this year, starting with the first quarter, are $1,700, $2,100, $3,500, and $2,500, respectively. What is the accounts receivable balance at the beginning of the second quarter? Assume that a year has 360 days.

A) $850
B) $1,050
C) $1,250
D) $1,750
E) $1,900

Question

Shawna Sullivan · Accepted Answer

Final Answer : A, Explanation :  The accounts receivable balance at the beginning of the second quarter is based on the sales from the first quarter that are still outstanding. With a 45-day accounts receivable period and 360 days in a year, 45 days is 1/8 of a year. Therefore, 1/8 of the first quarter's sales of $1,700 is still outstanding, which is $1,700 / 8 = $212.50. However, since the question asks for the balance at the beginning of the second quarter, it should be the full amount of sales from the first quarter that are still outstanding, which is $1,700 / 2 = $850.

Definitions

Learning Objectives

Learning Objectives

Related questions