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 70% are collected in the month following sale, and the remaining 5% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $280,000, and March sales totaled $310,000.

Required:

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

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

April May June Total Budgeted sales (all on account) $350,000 $550,000 $190,000 $1,090,000

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations schedule of expected cash collections Paticulars April May June Total February sales            14,000.00            14,000.00 March sales         217,000.00            15,500.00         232,500.00 April sales            87,500.00         245,000.00            17,500.00         350,000.00 May sales         137,500.00         385,000.00         522,500.00 June sales            47,500.00            47,500.00 Total cash collections         318,500.00         398,000.00         450,000.00      1,166,500.00 May Sales = 550000*.05            27,500.00 June sales=190000*.75         142,500.00 Total accounts receivable at June 30         170,000.00

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