Silver Company makes a product that is very popular as a Mothers Day gitt. Thus,

Question

Silver Company makes a product that is very popular as a Mothers Day gitt. Thus, peak sales oocur in May af each year, as shown in the company's sales budget for the second querter given below April $320,000 $520,000 $180,000 $1,020,000 May Budgeted sales(al n acount) $320,000 $620.000 $180,000 $1,020,000 June Total From past experence, the company has learned that 30% of a month's sales are collected in the month of sale, another 65% are colected in the month folowing sale, and the remaining 5% are colected in the second month following sale. Bad debts are neg $250,000, and March sales totaled $280,000. Required: 1. Prepare a schedule of expected cash colections 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 Apni sales May sales June sales Total cash collections 12,500 12,500 12,500 12,500 2. Assume that the company will prepare a budgeted balance sheet as af June 30. Compute the accounts rece vable as of that date. Silver Company receivable at June 30 May sales June sales Total accounts receivable at June 30

Explanation / Answer

1. Silver Company

Schedule of Expected Cash Collections

2. Silver Company

Accounts Receivable at June 30

April May June Total Collection of February Sales 12,500 12,500 March Sales 182,000 14,000 196,000 April Sales 96,000 208,000 16,000 320,000 May Sales 156,000 338,000 494,000 June Sales 54,000 54,000 Total Expected Cash Collectiond 290,500 378,000 408,000 1,076,500

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