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 May $480,000 S80,000 $260,000 June Total 51,420,000 Budgeted sales (all on account) From past experienoe, the company 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 5410,000, and March sales totaled 3440,000. has learned that 30% of a month's sales are collected in the month Required: 1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter e of Expected Cash C April May Total February sales March sales April sales May sales June sales Total cash collections 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

Explanation / Answer

April May June Total February sales 41000 41000 March sales 264000 44000 308000 April sales 144000 288000 48000 480000 May sales 204000 408000 612000 June sales 78000 78000 Total cash collections 449000 536000 534000 1519000 2 May sales 68000 =680000*10% June sales 182000 =260000*70% Total accounts receivable at June 30 250000

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