I need to know how we get account payable and account receivable for balance sheets of September and December

Toys for You, a manufacturing company, has been growing quickly but has found that its financial

situation is continually under pressure. Production has fluctuated to meet demand in an attempt

to provide firstclass service, resulting in larger inventory positions. Also, the collection of

accounts has worsened to approximately 60 days, which is well above the terms of 30 days. To

address the financial concerns, Toys for You has proposed level production and an effort by the

credit department to bring the average collection period down to 35 days.

Estimated sales for the upcoming months are:

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July $1,957,500 October 2,362,500

August 2,070,000 November 2,475,000

September 2,205,000 December 2,565,000

Sales for May were $1,732,500 and will be approximately $1,845,000 for the current month of

June.

It is projected that the current collection period of 60 days will be reduced to 50 days for July and

August, 42 days for September and October, and will meet the target of 35 days in November and

December.

Purchases are forecast to be $585,000 a month beginning in July, until December. In May they

were $630,000, and in June they are expected to be $592,500. The purchases are paid in 40 days.

Labour expense will be paid as incurred and will be $195,000 a month. Other expenses of

manufacturing will also be paid as incurred and are expected to be $375,000 a month. Cost of

goods sold has regularly been 70 percent of sales.

Amortization is $38,000 per month. Selling and administrative expenses are expected to be 13

percent of sales. The tax rate is 42 percent.

There will be payments on notes of $675,000 in each of August and November. Interest of

$270,000 and income taxes of $338,000 are both due in October. Dividends of $22,500 are

payable in July and October.

TOYS FOR YOU

Balance Sheet (estimated)

June 30, 20XY ($ thousands)

Assets

Current assets:

Cash $ 666

Accounts receivable 3,578

Inventory

Total current assets 12,475

Capital assets:

Plant and equipment 11,273

Less: Accumulated amortization

8,231

4,784 6,489

Using the information above, prepare pro forma statements for Toys for You for the three months

ending September and December 20XY. Also construct a cash budget for the sixmonth period

and identify any need for shortterm financing. There are no changes in accounts not mentioned

above. Comment on the policy changes and examine the consequences if the collection period

remains at 60 days. Assume capital assets are sufficient for increased sales.

TOYS FOR YOU

Balance Sheet (estimated)

June 30, 20XY ($ thousands)

Total assets

Liabilities and Shareholders' Equity

Current liabilities

Accounts payable $ 945

Notes payable 3,700

Accrued liabilities

Total current liabilities 7,241

Long-term debt 4,725

Common stock 4,500

Retained earnings

Total liabilities and shareholders' equity

$18,964

2,596

2,498

$18,964