If the actual A/R at the end of February was $12,000 and projected sales in March are $50,000, where 70% of sales are on credit, 60% of credit sales are collected in the month of the sale, and 40% are collected in the month after the sale, what is the projected A/R balance on the pro forma balance sheet for the end of March?

Question

Business

Jane Bryant

20 October, 07:43

If the actual A/R at the end of February was $12,000 and projected sales in March are $50,000, where 70% of sales are on credit, 60% of credit sales are collected in the month of the sale, and 40% are collected in the month after the sale, what is the projected A/R balance on the pro forma balance sheet for the end of March?

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Keyon Underwood · Answer 1

The projected A/R balance on the pro forma balance sheet for the end of March is $26,000

Explanation:

The computation of the projected A/R balance for the march month is shown below:

= February A/R + march A/R

where,

February A/R = $12,000

And, the March A/R = March Projected sales * credit sales percentage * next month collection percentage

= $50,000 * 70% * 40%

= $14,000

Now put these values to the above computation

So, the value would be equal to

= $12,000 + $14,000

= $26,000