Silver Company makes a product that is very popular as a Mother’s Day gift. Thus
ID: 2474484 • Letter: S
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:
April
May
June
Total
Budgeted sales (all on account)
$360,000
$560,000
$220,000
$1,140,000
From past experience, the company has learned that 30% of a month’s sales are collected in the month of sale,
another 60% are collected in the month following sale, and the remaining 10% are collected in the second month
following sale. Bad debts are negligible and can be ignored. February sales totaled $290,000, and March sales
totaled $320,000.
Required:
1.
Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter.
Schedule of Expected Cash Collection
April
May
June
Total
February Sales
March Sales
April Sales
May Sales
June Sales
Total cash collection
2.
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
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:
Explanation / Answer
ANSWER 1
Schedule of Expected Cash Collection
Answer 2
APRIL MAY JUNE TOTAL February Sales 29000 29000 March Sales 192000 32000 224000 April Sales 108000 216000 36000 360000 May Sales 168000 336000 504000 June Sales 66000 66000 Total cash collection 329000 416000 438000 1183000Related Questions
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