Answer:
c. $166,000
Explanation:
When a company makes sales on account, debit accounts receivable and credit sales. Where the sale is made on cash basis, the debit goes to the cash account.
Based on assessment, some or all of the receivables may be uncollectible. To account for this, debit bad debit expense and credit allowance for doubtful debt. Should the debt become uncollectible (i.e go bad), debit allowance for doubtful debt and credit accounts receivable.
The accounts receivable on September 30 would include 10% credit sales in August and 80% of credit sale in September
Given that
July August September October
Cash sales $80,000 $70,000 $50,000 $60,000
Credit sales 240,000 220,000 180,000 200,000
The budgeted accounts receivable balance on September 30
= 10% *$220,000 + 80% * $180,000
= $22,000 + $144,000
= $166,000
