Question

The budget director of Heather’s Florist has prepared the following sales budget. The company had $290,000 in accounts receivable on July 1. Heather’s Florist normally collects 100 percent of accounts receivable in the month following the month of sale. Required Complete the schedule of cash receipts by filling in the missing amounts. Determine the amount of accounts receivable the company will report on its third quarter pro forma balance sheet.

Answer 1

Answer:

Explanation:

1) Schedule of cash receipts:

Since 100% of account receivable is collected in the month following the month of sale, which means $290,000 will be collected in July.

2)  If there are no sales in September, amount of accounts receivable the company will report on its 3rd quarter balance sheet will be 0. Otherwise, the ending accounts receivable at the end of 3rd quarter will be = sales amount in September.

Answer 2

Answer:

a)

                                            July             August          September

Sales Budget:

Cash Sales                         $65,000      $76,000        $73,000

Sales on Account              $92,000      $102,000       $138,600

Total Budget Sales:           $157,000     $178,000      $211,600

Schedule of Cash Receipt:

Current Cash Sales               $65,000       $76,000        $73,000

Receivable Collections         $290,000     $92,000       $102,000

Total Budgeted Collections: $355,000     $168,000      $175,000

b)

Determining the amount of accounts receivable the company will report on its third quarter pro forma balance sheet is:

Amount of accounts receivable = September sales - cash sales

                                                     = $211,600 - $73,000

                                                     = $138,600

Explanation:

Total Budget Sales for each month is the addition of cash sales and sales on account.

Total Budgeted Collections is the addition of Receivable Collections and Current Cash Sales.