Reference no: EM132574915

Home Corporation will open a new store on January 1. Based on experience from its other retail outlets, Home Corporation is making the following sales projections:

                         Cash Sales                        Credit Sales

January                 $60,000                        $40,000

February               30,000                          50,000

March                    40,000                       60,000

April                       40,000                        80,000

Home Corporation estimates that 70% of the credit sales will be collected in the month following the month of sale, with the balance collected in the second month following the month of sale.

Question 1: Based on these data, the balance in accounts receivable on January 31 will be:

Option 1: $40,000

Option 2: $28,000

Option 3: $12,000

Option 4: $58,000