Silver Company makes a product that is very popular as a Mother’s Day gift. Thus

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 20% of a month’s sales are collected in the month of sale, another 75% are collected in the month following sale, and the remaining 5% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $270,000, and March sales totaled $300,000.

Prepare a schedule of expected cash collections from sales, 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.

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

SCHEDULE OF EXPECTED CASH COLLECTIONS APRIL MAY JUNE TOTAL February sales 13500 0 0 13500 March sales 225000 15000 0 240000 April sales 68000 255000 17000 340000 May sales 0 108000 405000 513000 June sales 0 0 34000 34000 Total Cash collections 306500 378000 456000 1140500 ACCOUNTS RECEIVABLES AS ON 30TH JUNE MAY SALES 27000 JUNE SALES 136000 Total 163000

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