Silver Company makes a product that is very popular as a Mother\'s Day gift. Thu

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 Budgeted sales (all on account) 400,000$600,000$190,000 $1,190,000 From past experience, the company has learned that 30% of a month's sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 10% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $330,000, and March sales totaled $360,000. 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? Complete this question by entering your answers in the tabs below Required 1Required 2 Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter Schedule of Expected Cash Collections April June Total February sales March sales April sales May sales June sales Total cash collections 108,000 120,000 216,000 240,000 180,000 360,000 400,000 540,000 57.000 493.000 $ 1.357.000 36,000 40,000 360,000 57,000 S 228,000 $ 636,000 Required 2

Explanation / Answer

1. Cash collection by month in 2nd quarter =

April month=

10% of February sales + 60% of march sales + 30% of April sales

( 330000×10%) + ( 360000×60%) + (400000×30%)

= 33000+ 216000+ 120000

= $ 369000

May month=

10% of march sales + 60% of april sales + 30% of may sales

= (360000×10%) + (400000× 60%) + (600000×30%)

= 36000 + 240000 + 180000

= $ 456000

June month=

10% of april sales + 60% of may sales + 30% of june sales

= (400000×10%) + (600000×60%) + (190000×30%)

= 40000+ 360000 + 57000

= $ 457000

Cash collection for 2nd quarter in total=

Cash collection for april month + cash collection for may month + cash collection for June month

= $369000 + $456000 + $457000

= $1282000

2. Accounts receivable balance on june 30=

10% of may sales + 70% of june sales

= (600000×10%) + (190000×70%)

= 60000+ 133000

= $193000

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