Silver Company makes a product that is very popular as a Mother\'s Day gift. Thu

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)$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 Silver Company Schedule of Expected Cash Collections April June Total April sales May sales June sales Total cash ns

Explanation / Answer

Schedule of expected cash collection :

b) Compute account receivable balance :

April May June Total February sales 57000 57000 March sales 246000 61500 307500 April sales 112500 270000 67500 450000 May sales 162500 390000 552500 June sales 62500 62500 Total cash collection 415500 494000 520000 1429500

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