If on the Last Day of February the Actual A/R

question 51

Multiple Choice

If on the last day of February the actual A/R balance was $12,000; projected sales in March are $50,000; 70% of sales are on credit; 60% of credit sales are collected in the month of 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?

• A) $26,000
• B) $14,000
• C) $20,000
• D) $35,000

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Definitions:

Crystal Ball

Software used for predictive modeling, forecasting, simulation, and optimization.

Sensitivity Charts

Visual tools that display how changes in input variables affect the output of a model, commonly used in decision analysis.

Cumulative Net Profit

The total amount of profit or loss made over a given period after all expenses are taken into account.

Probability

The quantification of the chance that an event happens, indicated by a numerical range from 0 to 1.