Rooney Pointers Corporation expects to begin operations on January 1, 2019; it will operate as a...
Rooney Pointers Corporation expects to begin operations on January 1, 2019; it will operate as a specialty sales company that sells laser pointers over the Internet. Rooney expects sales in January 2019 to total $220,000 and to increase 10 percent per month in February and March. All sales are on account. Rooney expects to collect 69 percent of accounts receivable in the month of sale, 22 percent in the month following the sale, and 9 percent in the second month following the sale.
Required
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Prepare a sales budget for the first quarter of 2019.
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Determine the amount of sales revenue Rooney will report on the first 2019 quarterly pro forma income statement.
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Prepare a cash receipts schedule for the first quarter of 2019.
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Determine the amount of accounts receivable as of March 31, 2019.
Homework Answers
| a) Sales Budget: | January | February | March | First Quarter |
| Total Expected sales ($220,000*110/100); ($242,000*110/100) | $220,000 | $242,000 | $266,200 | $728,200 |
| b) The amount of total sales revenue Rooney will report on the first quarter is $728,200 ($220,000 + $242,000 + $266,200) | ||||
| c) Cash Receipts Schedule: | January | February | March | First Quarter |
| Cash receipts from: | ||||
| January credit sales ($220,000*69/100); ($220,000*22/100); ($220,000*9/100) | $151,800 | $48,400 | $19,800 | $220,000 |
| February credit sales ($242,000*69/100); ($242,000*22/100) | $166,980 | $53,240 | $220,220 | |
| March credit sales ($266,200*69/100) | $183,678 | $183,678 | ||
| Total cash collections from credit sales | $151,800 | $215,380 | $256,718 | $623,898 |
| d) Amount of Accounts Receivable: | Mar. 31, 2019 | |||
| February credit sales ($242,000*9/100) | $21,780 | |||
| March credit sales [($266,200*22/100) + ($266,200*9/100)] | $82,522 | |||
| Amount of accounts receivable as of March 31, 2019 | $104,302 | |||
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