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 Budgeted sales (all on account) $360,000 $560,000 $220,000 $1,140,000 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 $290,000, and March sales totaled $320,000. Required: 1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter Schedule of Expected Cash Collections April May June Total February sales March sales April sales May sales June sales Total cash collections 2. Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accounts , receivable as of that date May sales June sales Total accounts receivable at June 30

Explanation / Answer

Schedule of expected cash collection :

2) Calculate account receivable :

April May June Total February sales 29000 29000 March sales 192000 32000 224000 April Sales 108000 216000 36000 360000 May sales 168000 336000 504000 June sales 66000 66000 Total cash collections 329000 416000 438000 1183000

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