Question

The budget director of Heather’s Florist has prepared the following sales budget. The company had $370,000 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

1. Complete the schedule of cash receipts by filling in the missing amounts.

	July	August	September
Sales Budget
Cash sales	$72,000	$68,000	$86,000
Sales on account	86,000	107,000	121,600
Total budgeted sales	$158,000	$175,000	$207,600
Schedule of Cash Receipts
Current cash sales
Plus: Collections from accounts receivable
Total budgeted collections	$442,000	$154,000	$193,000

1. Determine the amount of accounts receivable the company will report on its third quarter pro forma balance sheet.

Accounts Receivable ______

Answer 1

• Requirements

	July	August	September
Sales Budget
Cash sales	$72,000	$68,000	$86,000
Sales on account	$86,000	$107,000	$121,600
Total budgeted sales	$158,000	$175,000	$207,600
Schedule of Cash Receipts
Current cash sales	$72,000	$68,000	$86,000
Plus: Collections from accounts receivable	$370,000	$86,000	$107,000
Total budgeted collections	$442,000	$154,000	$193,000

• Accounts receivables at the end of Third Quarter
  = 100% of September’s sales on account
  = 100% of $ 121600
  = $ 121,600 [Answer]