Bright Minds Toy Company prepared the following sales budget for the second quarter.Projected sales for each of the first three months of operations are as follows: $\begin{array}{lccc}
\text {Sales Budget}& \text { April } & \text { May } & \text { June}\
\text {Cash Sales}&30,000 & 43,000&55,000 \
\text { Sales on Account}&370,0 & 432,000&405,000 \
&400,000&475,000&460,000
\end{array}$
Bright Minds expects to collect 70% of the sales on account in the month of sale,20% in the month following the sale,and the remainder in the second month following the sale.
What is the ending accounts receivable balance that would be reported on the pro forma balance sheet prepared as of June 30?

Question

Bright Minds Toy Company prepared the following sales budget for the second quarter.Projected sales for each of the first three months of operations are as follows: $\begin{array}{lccc}
\text {Sales Budget}&  \text { April } & \text { May } & \text { June}\
\text {Cash Sales}&30,000 & 43,000&55,000 \
\text { Sales on Account}&370,0 & 432,000&405,000 \
&400,000&475,000&460,000
\end{array}$
 Bright Minds expects to collect 70% of the sales on account in the month of sale,20% in the month following the sale,and the remainder in the second month following the sale.
What is the ending accounts receivable balance that would be reported on the pro forma balance sheet prepared as of June 30?

Quizplus · Accepted Answer

The correct answer is A.The ending accounts receivable balance is the sum of the sales on account that have not yet been collected. As of June 30, the sales on account that have not yet been collected are the sales on account from May and June. The sales on account from May were $432,000, and 20% of this amount, or $86,400, was collected in May. The remaining 80%, or $345,600, is still outstanding as of June 30. The sales on account from June were $405,000, and none of this amount has been collected as of June 30. Therefore, the ending accounts receivable balance is $345,600 + $405,000 = $750,600.

Bright Minds Toy Company Prepared the Following Sales Budget for the Second