Use the "Percent of Sales Method" of Preparing Pro Forma

question 69

Multiple Choice

Use the "percent of sales method" of preparing pro forma financial statements to determine the projection for next year's accounts receivable.Make the following assumptions: current year's sales are $45,450,000; current year's cost of goods sold is $26,950,000; sales are expected to rise by 20%.The firm's investment in accounts receivable in the current year is $8,600,000.The firm's marginal tax rate is 35%.What is the projection for next year's accounts receivable?

• A) $11,345,000
• B) $10,320,000
• C) $9,575,000
• D) $8,772,000

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Definitions:

Neutral Conductor

The grounded conductor of a power system. It is connected to ground potential and is considered a current-carrying conductor. The neutral is generally white or gray in color.

Equipment Ground

A safety connection designed to protect against electrical shocks by providing a path for fault current to flow to earth ground.

Hot

Often refers to a conductor or component under voltage or at a higher temperature due to electrical resistance.

Ungrounded

Referring to an electrical system or device not connected to the ground, which can pose safety risks due to the potential for electric shock.