FM27 24 - Answer: The uncollected balances schedule can be...

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Mini Case: 27- 24 h. Assume that it is now July of year 1, and the brothers are developing pro forma financial statements for the following year. Further, assume that sales and collections in the first half-year matched the predicted levels. Using the year 2 sales forecasts as shown next, what are next year's pro forma receivables levels for the end of March and for the end of June? Predicted Predicted Predicted contribution Month sales A/R-to-sales ratio to receivables Jan $150 0% $ 0 Feb 300 20 60 Mar 500 70 350 projected March 31 A/R balance = $410 Apr $400 May 300 Jun 200 Projected June 30 A/R balance =
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Unformatted text preview: Answer: The uncollected balances schedule can be used to forecast the pro forma receivables balance . For forecasting, the historical receivables-to-sales ratios are generally assumed to be good predictors of future payment patterns, and hence are applied to the sales forecasts to develop the expected receivables: Predicted Predicted Predicted contribution Month sales A/R-to-sales ratio to receivables Jan $150 0% $ 0 Feb 300 20 60 Mar 500 70 350 projected March 31 A/R balance = $410 Apr $400 0% $ 0 May 300 20 60 Jun 200 70 140 projected June 30 A/R balance = $200...
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.

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