Exercise 14-16 Preparing a sales budget and schedule of cash receipts McCarty Po

Question

Exercise 14-16 Preparing a sales budget and schedule of cash receipts

McCarty Pointers Inc. expects to begin operations on January 1, 2012; it will operate as a specialty sales company that sells laser pointers over the Internet. McCarty expects sales in January 2012 to total $200,000 and to increase 10 percent per month in February and March. All sales are on account. McCarty 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 2012.
B.Determine the amount of sales revenue McCarty will report on the first 2012 quarterly pro forma income statement.
C.Prepare a cash receipts schedule for the first quarter of 2012.
D.Determine the amount of accounts receivable as of March 31, 2012.

Explanation / Answer

sales in January 2012 to total 200,000$ and to increase 10 percent per month in Febuary and March Determine the amount of sales revenue McCarty will report on the first 2012 quarterly pro forma income statement McCarty 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 Prepare a cash receipts schedule for the first quarter 2012? Determine the amount of accounts receivable as of March 31, 2012 so a matter of simple mathematics 200000*1.1 = February * 1.1 = March January + February + March = 200000*.7 = January 200000* .2 =February 200000 *.1 = March

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