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Problem 14-16 Preparing a Sales Budget and Schedule of Cash Receipts

Problem 14-16 Preparing a Sales Budget and Schedule of Cash Receipts
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ACCOUNTING

Survey of Accounting
Second (2nd) Edition
Thomas Edmonds, Philip Olds, Frances McNair, Bor-Yi Tsay
ACC 201 ACC/201 Accounting 201

Problem 14-16 Preparing a Sales Budget and Schedule of Cash Receipts

Dorough Pointers Inc. expects to begin operations in January1, 2009. Dorough expects sales in January 2009 to total $120,000 and to increase 10 percent per month in February and March. All sales are on account. Dorough expects to collect 70 percent of accounts receivable in the month of sale, 20 percent in the month following the sale, and 10 percent in the second month following the sale.

Required
a. Prepare a sales budget for the first quarter of 2009.
b. Determine the amount of sales revenue Dorough will report on the first 2009 quarterly pro forma income statement.
c. Prepare a cash receipts schedule for the first quarter of 2009.
d. Determine the amount of accounts receivable as of March 31, 2009.

Check:
c.Feb.: $116,400
March: $140,040

 

FILE: MS WORD

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