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Net accounts receivable

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Webster Lighting Ltd. began operations on December 1st of last year and is preparing their budgets for the upcoming quarter (January, February and March). After reviewing past receipt patterns you have found the following collection pattern:

In the month of sale 40%
In the first month after the sale 30%
In the second month after the sale 20%
In the third month after the sale 10%

You have the following information regarding projected sales (all sales are credit sales):

January $350,000
February $405,700
March $420,900

Assuming that Accounts Receivable had a balance of $150,000 on January 1st, what is the net accounts receivable balance as at the end of March?

a. $259,250
b. $334,250
c. $409,250
d. $469,250
e. $559,250

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The solution explains how to calculate the amount of net accounts receivable

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