Silver Company makes a product that is very popular as a Mother’s Day gift. Thus

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 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.

Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accounts receivable as of that date.

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

Req 1 EXPECTED CASH COLLECTIONS APRIL MAY JUNE QUARTER Feb month sales 41,000 41,000 March Month Sales 264,000 44000 308,000 April Month Sales 144000 288000 48000 480,000 May Month Sales 204,000 408,000 612,000 June Month sales 78000 78,000 Total Cash Collections 449,000 536,000 534,000 1,519,000 Rreq 2: Accounts receivable at the end of June: May month sales (680000*10%) 68000 June Month sales (260000*70%) 182000 Balance in Accounts receivable at June30 250,000

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