Silver Company makes a product that is very popular as a Mother’s Day gift. Thus
ID: 2398079 • Letter: S
Question
Silver Company makes a product that is very popular as a Mother’s Day gift. Thus, peak sales occur in May of each year, as shown in the company’s sales budget for the second quarter given below:
From past experience, the company has learned that 25% of a month’s sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 15% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $260,000, and March sales totaled $290,000.
Required:
1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter.
2. What is the accounts receivable balance on June 30th?
Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter.
$0
What is the accounts receivable balance on June 30th?
April May June Total Budgeted sales (all on account) $330,000 $530,000 $210,000 $1,070,000Explanation / Answer
Schedule of Expected Cash Collections
April
May
June
Total
February Sales
$ 39,000.00
$ 39,000.00
March Sales
$ 174,000.00
$ 43,500.00
$ 217,500.00
April Sales
$ 82,500.00
$ 198,000.00
$ 49,500.00
$ 330,000.00
May Sales
$ 132,500.00
$ 318,000.00
$ 450,500.00
June Sales
$ 52,500.00
$ 52,500.00
Total Cash Collection
$ 295,500.00
$ 374,000.00
$ 420,000.00
$ 1,089,500.00
Accounts Receivables Balance
Balance of may sales
(15% of sale)
$ 79,500.00
Balance of June Sale
(75% of sale)
$ 157,500.00
Total balance of Receivables at June 30th
$ 237,000.00
Schedule of Expected Cash Collections
April
May
June
Total
February Sales
$ 39,000.00
$ 39,000.00
March Sales
$ 174,000.00
$ 43,500.00
$ 217,500.00
April Sales
$ 82,500.00
$ 198,000.00
$ 49,500.00
$ 330,000.00
May Sales
$ 132,500.00
$ 318,000.00
$ 450,500.00
June Sales
$ 52,500.00
$ 52,500.00
Total Cash Collection
$ 295,500.00
$ 374,000.00
$ 420,000.00
$ 1,089,500.00
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