Silver Company makes a product that is very popular as a Mother’s

jagguarpaw January 19, 2017 0 Comments

Question: 9-1 Silver Company makes a product that is very products…

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 May June Total
Budgeted sales (all on account) $450,000 $650,000 $250,000 $1,350,000

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.

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 $0
March sales 0
April sales 0
May sales 0
June sales 0
Total cash collections $0 $0 $0 $0
  1. 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 $0