Final answer:
The March 31 pro forma income statement's sales amount equals the total sales for January, February, and March as shown in the sales budget. This forecasted revenue is based on the expected sales performance for the first quarter. thus, the option 1 is the correct answer.
Step-by-step explanation:
When discussing the sales shown on the March 31 pro forma income statement, they typically match the total amount of sales for the quarter listed in the sales budget. This is because the pro forma income statement reflects the expected sales performance for a particular period, which in this case is the first quarter.
The correct answer to the student's question would be option 1: the amount of sales shown on the March 31 pro forma income statement is equal to the total amount of sales for January, February, and March that are shown in the sales budget. The sales budget will outline the expected sales (units and price) for the period, which translates to forecasted revenue on the income statement.
It is critical to distinguish between sales and cash collections on the cash budget since they represent different aspects of financial management. The cash budget reflects the actual cash inflow and outflow, which includes cash collections from sales made on credit, and not just the revenue from sales made during the period.