Chap 8 Q1 Silver Company makes a product that is very popular as a Mother’s Day

Question

Chap 8 Q1

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 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 $410,000, and March sales totaled $440,000.

Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter.

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:

Explanation / Answer

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2.

Schedule of Expected Cash Collections April May June Total February Sales $41,000 $0 $0 $41,000 March Sales $264,000 $44,000 $0 $308,000 April Sales $144,000 $288,000 $48,000 $480,000 May Sales $0 $204,000 $408,000 $612,000 June Sales $0 $0 $78,000 $78,000 Total Cash Collections $449,000 $536,000 $534,000 $1,519,000

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