1. a50 points Silver Company makes a product that is very popular as a Mother\'s

Question

1. a50 points 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 65% 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 $300,000, and March sales totaled $330,000 Required: 1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. Total cash 2. Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accounts receivable as of that date. Total accounts

Explanation / Answer

Solution 1:

Solution 2:

Schedule of expected cash collection Particulars April May June Total Feburary 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

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