Question

Stuart Pointers Corporation expects to begin operations on January 1, year 1; it will operate as a specialty sales company that sells laser pointers over the Internet. Stuart expects sales in January year 1 to total $260,000 and to increase 10 percent per month in February and March. All sales are on account. Stuart expects to collect 68 percent of accounts receivable in the month of sale, 25 percent in the month following the sale, and 7 percent in the second month following the sale.

Required

1. Prepare a sales budget for the first quarter of year 1.

2. Determine the amount of sales revenue Stuart will report on the year 1 first quarterly pro forma income statement.

3. Prepare a cash receipts schedule for the first quarter of year 1.

4. Determine the amount of accounts receivable as of March 31, year 1.

Prepare a sales budget for the first quarter of year 1.

	Sales Budget January February March Sales on account   $260,000

Determine the amount of sales revenue Stuart will report on the year 1 first quarterly pro forma income statement.

	Sales revenue

Prepare a cash receipts schedule for the first quarter of year 1. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.

	Schedule of Cash Receipts January    February    March    Receipts from January sales Receipts from February sales Receipts from March sales Total $0 $0 $0

Determine the amount of accounts receivable as of March 31, year 1. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.)

	Accounts receivable

Answer 1

Prepare a sales budget for the first quarter of year 1.

	Sales Budget January February March Sales on account   $260,000   260000*1.1 = 286000 286000*1.1 = 314600

Determine the amount of sales revenue Stuart will report on the year 1 first quarterly pro forma income statement.

	Sales revenue 860600

Prepare a cash receipts schedule for the first quarter of year 1. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.

	Schedule of Cash Receipts January    February    March    Receipts from January sales 176800 65000 18200 Receipts from February sales 194480 71500 Receipts from March sales 213928 Total 176800 259480 303628

Determine the amount of accounts receivable as of March 31, year 1. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.)

	Accounts receivable (286000*7%+314600*32%) = 120692