Question

ABC, Incorporated, has a beginning receivables balance on January 1st of $580. Sales for January through April are $340, $370, $450 and $470, respectively. The accounts receivable period is 60 days. How much did the firm collect in the month of March? Assume 365 days per year.


Multiple Choice

$340


$580


$450


$470


$370

Answer 1

To determine how much ABC, Incorporated collected in the month of March, we need to consider the sales during January, February, and March, as well as the accounts receivable period and how it affects the collections.

1. **Sales by Month**:
- January: $340
- February: $370
- March: $450

2. **Accounts Receivable Period**: 60 days means the company collects receivables on a rolling basis for sales made in previous months.

3. **Receivables Collection Timing**:
- Sales made in January ($340) will be collected in March.
- Sales made in February ($370) will be collected in April.
- Sales made in March ($450) will be collected in May.

Now, let's calculate the collections in March:

- From January's sales of $340, the firm will collect that amount in March.
- From February's sales of $370, the firm will not collect anything in March (that amount will be collected in April).
- In March, the firm will not collect anything from its own sales during that month (checks are collected in the following month).

Thus, the total amount collected in March will include:
- January's collection ($340).

So, the total collections in March are:

**Total collected in March: $340**

Therefore, the correct answer is:

**$340.**