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: From past experience, the company has learned that 25 percentage of a month's sales are collected in the month of sale, another 65 percentage are collected in the month following sale, and the remaining 10 percentage are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled dollar 300,000, and March sales totaled dollar 330,000. Required: Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accounts receivable as of that date.

Explanation / Answer

Schedule of Expected Cash Collection Particulars April May June Total Feb sales $    30,000.00 $        30,000.00 March Sales $ 214,500.00 $    33,000.00 $      247,500.00 April Sales $    92,500.00 $ 240,500.00 $    37,000.00 $      370,000.00 May Sales $ 142,500.00 $ 370,500.00 $      513,000.00 June Sales $    45,000.00 $        45,000.00 Total Cash Collections $ 337,000.00 $ 416,000.00 $ 452,500.00 $ 1,205,500.00 Account Receivable as on 30th june Particulars Amount May sales $    57,000.00 June Sales $ 135,000.00 Total Accounts Receivable as on 30th june $ 192,000.00

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