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: From past experience, the company has learned that 25% of a month's sales are collected in the month of sate, another 60% are collected in the month following sate, and the remaining 15% are collected in the second month following sate. Bad debts are negligible and can be ignored. February sates totaled S240.000. and March sates totaled $270,000. Prepare a schedule of expected cash collections from sates, 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.

Explanation / Answer

Schedule of expected cash collection from sales

Budgeted balance sheet as of june 30

April may June total February sales 36000(15%) 36000 March sales 162000(60%) 40500(15%) 202500 April sales 77500(25%) 186000(60%) 46500(15%) 310000 May sales 127500(25%) 306000(60%) 433500 June sales 40000(25%) 40000 Total cash collection 275500 354000 392500 1022000

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