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 Total $1,140,000 April May $360,000 $560,000 $220,000 June Budgeted sales (all on account) 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 Silver Company Schedule of Expected Cash Collections April May June Total February sales March sales April sales May sale:s June sales Total cash collections 0

Explanation / Answer

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 collections 329000 416000 438000 1183000 2 May sales 56000 =560000*10% June sales 154000 =220000*70% Total accounts receivable June 30 210000

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