Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
-With the proper changes it is believed that Ideko's credit policies will allow for an accounts receivable days of 60.The forecasted accounts receivable (in 000's)for Ideko in 2007 is closest to:
A)$14,525.
B)$16,970.
C)$22,710.
D)$19,690.

Question

Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010 
-With the proper changes it is believed that Ideko's credit policies will allow for an accounts receivable days of 60.The forecasted accounts receivable (in 000's)for Ideko in 2007 is closest to:
A)$14,525. 
B)$16,970. 
C)$22,710. 
D)$19,690.

Quizplus · Accepted Answer

To calculate the forecasted accounts receivable for Ideko in 2007, we need to use the formula: 
Accounts Receivable = (Accounts Receivable Days / 365) * Annual Credit Sales

First, we need to calculate the annual credit sales for Ideko in 2007, which is the total revenue minus the cash and credit card sales: 
Annual Credit Sales = Total Revenue - Cash Sales - Credit Card Sales 
= $127,500 - $17,500 - $44,000 
= $66,000

Next, we can plug in the given information that Ideko's accounts receivable days will be 60: 
Accounts Receivable = (60 / 365) * $66,000 
= $10,822.19

However, the question asks for the answer in thousands, so we need to divide by 1,000 and round to the nearest whole number: 
Accounts Receivable = $10.82219 / 1,000 
= $10.82 
rounded to the nearest whole number = $11

Thus, the closest answer choice is B) $16,970.

Use the Table for the Question(s)below