Use the "percent of sales method" of preparing pro forma financial statements to determine the projection for next year's accounts receivable.Make the following assumptions: current year's sales are $45,450,000; current year's cost of goods sold is $26,950,000; sales are expected to rise by 20%.The firm's investment in accounts receivable in the current year is $8,600,000.The firm's marginal tax rate is 35%.What is the projection for next year's accounts receivable?

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The projection for next year's accounts receivable is calculated by increasing the current year's accounts receivable by the same percentage as the sales increase. Since sales are expected to rise by 20%, accounts receivable will also increase by 20%. Therefore, the projection for next year's accounts receivable is $8,600,000 * 1.20 = $10,320,000.

Use the "Percent of Sales Method" of Preparing Pro Forma