Silver Company makes a product that is very popular as a Mother’s Day gift. Thus
ID: 2569166 • Letter: S
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:
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 $410,000, and March sales totaled $440,000.
Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter.
Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accounts receivable as of that date.
Silver Company makes a product that is very popular as a Mother’s Day gift. Thus, peak sales occur in May of each year, as shown in the company’s sales budget for the second quarter given below:
Explanation / Answer
Schedule of expected cash collections from sales, by month and in total, for the second quarter
February 410,000
30% in Feb
60% in March
10% in April
41,000
March 440,000
30% in March
60% in April
10% in May
264,000
44,000
April 480,000
30% in April
60% in May
10% in June
144,000
288,000
48,000
May 680,000
30%
60%
10%
204,000
408,000
June 260,000
30%
60%
10%
78,000
Budgeted balance sheet as of June 30
Note:
As on 30th June Amount receivable are- 10% of May + 70% of June i.e 68,000 + 162,000
Month of sales &Sales ($) Month of collection April($) May ($) June($) Total($)February 410,000
30% in Feb
60% in March
10% in April
41,000
March 440,000
30% in March
60% in April
10% in May
264,000
44,000
April 480,000
30% in April
60% in May
10% in June
144,000
288,000
48,000
May 680,000
30%
60%
10%
204,000
408,000
June 260,000
30%
60%
10%
78,000
Total Amount collection ($) 449,000 536,000 534,000Related Questions
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