Exercise 8-1 Schedule of Expected Cash Collections LLO8-2 Silver Company makes a

Question

Exercise 8-1 Schedule of Expected Cash Collections LLO8-2 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: April $490,000 $690,000 $220,000 1,400,000 May June Total Budgeted sales (all on account) 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 $420,000, and March sales totaled $450,000. Required: 1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. 2. What is the accounts receivable balance on June 30th? Complete this question by entering your answers in the tabs below. Required 1Required 2 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

Explanation / Answer

2.

April May June Quarter February sales collection $420,000*15% = $63,000 $        63,000 March sales collection $450,000*60% = $270,000 $450,000*15% = $67,500 $     337,500 April sales collection $490,000*25% = $122,500 $490,000*60% = $294,000 $490,000*15% = $73,500 $     490,000 May sales collection $690,000*25% = $172,500 $690,000*60% = $414,000 $     586,500 June sales collection $220,000*25% = $55,000 $        55,000 Total cash collection $                                   455,500 $                                   534,000 $                                   542,500 $ 1,532,000

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