Question

The budget director of Heather’s Florist has prepared the following sales budget. The company had $320,000 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.

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

How do you figure out collections for account receivable?

Answer 1

Solution:

Heather's Florist
	July	August	September
Sales Budget:
Cash Sales	$76,000	$82,000	$90,000
Sales On account	$87,000	$1,15,000	$1,37,600
Total Budgeted Sales	$1,63,000	$1,97,000	$2,27,600
Schedule of Cash receipts:
Current cash sales	$76,000	$82,000	$90,000
Plus: Collection from Accounts Receivable (100% in next month)	$3,20,000	$87,000	$1,15,000
Total Budgeted Cash Receipts	$3,96,000	$1,69,000	$2,05,000