EXERCISE 9-1 Schedule of Expected Cash Collections [LO 9-2 Silver Company makes

Question

EXERCISE 9-1 Schedule of Expected Cash Collections [LO 9-2 Silver Company makes a product that is very popular as a Mother's Day ift. 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 Toin all on account)$ $300,000 $500,000 $200,000 $1,000,000 From past experience, the company has learned that 20% of a month's sales are collected in the month of sale, another 70% 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 $230,000, and March sales totaled $260,000. Required: 1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter 2. Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accounts receivable as of that date.

Explanation / Answer

April May June Total February sales 23000 23000 March sales 182000 26000 208000 April sales 60000 210000 30000 300000 May sales 100000 350000 450000 June sales 40000 40000 Total cash collections 265000 336000 420000 1021000 2 May sales 50000 =500000*10% June sales 160000 =200000*80% Total accounts receivable at June 30 210000

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