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 April $330,000 $530,000 $210,000 $1,070,000 May Total June Budgeted sales (all on account) 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 $260,000, and March sales totaled $290,000. Required 1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. 2. What is the accounts receivable balance on June 30th?

Explanation / Answer

Schedue of expected cash collection :

April May June Total February sale 39000 39000 march sale 174000 43500 217500 April sale 82500 198000 49500 330000 May sale 132500 318000 450500 June sale 52500 52500 Total cash collection 295500 374000 420000 1089500

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