Dorough Pointers Inc, expects to begin operations on January 1, 2009; it will op

Question

Dorough Pointers Inc, expects to begin operations on January 1, 2009; it will operate as a specialty sales company that sells laser pointers over the Internet. Dorough expects sales in January 2009 to total $120,000 and to increase 10% per month in February and March. All sales are on account. Dorough expects to collect 70% of accounts receivable in the month of sale, 20% in the month following the sale, and 10% 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.

Explanation / Answer

Sales Budget of Dorough Pointers Inc

For the First of 2009

$120,000

$120,000

$120,000

$120,000

84000

a.

Sales Budget of Dorough Pointers Inc

For the First of 2009

January Feburary March Quarter Sales Sales - (A)

$120,000

$120,000 $132,000 Incresed Sales = 120000 *10% =132000*10% Incresed Sales - (B) = 12000 = 13200 Total Sales - (A+B)

$120,000

$132,000 $145,200 $397,200

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