Question

star company prepared the following sales budget for the second quarter. projected sales for each of the first three months of operations are as follows: sales budget april may june cash sales 30,000 43,000 55,000 sales on account 370,000 432,000 405,000 400,000 475,000 460,000 star co. 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?

Answer 1

The amount that would be reported on the pro forma balance sheet prepared as of June 30 would be $861,600. In accounting, the term "balance" refers to the difference between the debits and credits in a particular account.

The balance of an account is calculated by taking the sum of all debits and subtracting the sum of all credits. If the resulting balance is positive, it is known as a debit balance. If the balance is negative, it is known as a credit balance. To determine the ending accounts receivable balance for June, we need to calculate the amount of sales on account that will remain uncollected as of June 30.

For April, 70% of the sales on account will be collected in April, leaving 30% uncollected. This is equal to 30% * $370,000 = $111,000.

For May, 20% of the sales on account will be collected in June, leaving 80% uncollected. This is equal to 80% * $432,000 = $345,600.

For June, the entire amount of sales on account will remain uncollected. This is equal to $405,000.

Therefore, the ending accounts receivable balance for June is equal to $111,000 + $345,600 + $405,000 = ${data-answer}lt;<111000+345600+105000=861600>>861,600. This is the amount that would be reported on the pro forma balance sheet prepared as of June 30.

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