Homework Answers
a. Statement showing the sales budget for the first quarter of Year 1:
Given information
Solomon printers corporation begins operations on January 1, Year 1.
The expected sales in January Year 1 to total $360,000.
The expected sales will increase by 15% per month for February and March.
Therefore the dollar sales for first quarter of Year 1 will be as follows:
| January | February | March | Total | |
| Sales on account (in dollars) | $360,000 | $414,000 | $476,100 | $1,250,100 |
| ($360,000 x 115%) | ($414,000 x 115%) |
b. The amount of sales revenue to be reported in the Year 1 of proforma income statement is $1,250,100.
c. Statement showing the cash receipts schedule for the first quarter of Year 1:
Given information
Solomon printers corporation had made all sales on account. Of which 66% of accounts receivable in the month of sale, 24% in the month following the sale, and 10% in the second month following the sale.
Cash receipts for the quarter will be as follows
| Schedule of cash receipts | January | February | March |
| Receipts from January sales | $237,600 ($360,000 x 66%) | $86,400 ($360,000 x 24%) | $36,000 ($360,000 x 10%) |
| Receipts from February sales | $273,240 ($414,000 x 66%) | $99,360 ($414,000 x 24%) | |
| Receipts from March sales | $314,226 ($476,100 x 66%) | ||
| Total | $237,600 | $359,640 | $449,586 |
d. Calculation of amount of accounts receivable as of March 31, Year 1:
10% of February sales will be received in April and
24% of March sales will be received in April and 10% will be received in May.
| April | May | Total | |
| Receipts from February sales | $41,400 ($414,000 x 10%) | $41,400 | |
| Receipts from March sales | $114,264 ($476,100 x 24%) | $47,610 ($476,100 x 10%) | $161,874 |
| Total | $155,664 | $47,610 | $203,274 |
Accounts receivable to be reported as of March 31, Year 1 is $203,274.
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