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 25% of a month’s sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 15% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $380,000, and March sales totaled $410,000.

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

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

Account receivable balance on june 30 = (650000*15%+250000*75%) = 285000

April May June Second quarter 25% of a month’s sales 112500 162500 62500 337500 60% are collected in the month following sale 246000 270000 390000 906000 15% are collected in the second month following sale 57000 61500 67500 186000 Total 415500 494000 520000 1429500

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