14.28 points Silver Company makes a product that is very popular as a Mother\'s

Question

14.28 points 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 Budgeted sales(all on account) 5300,000 $500,000 5200,000 $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 of June 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 23000 23000 March sales 182000 182000 April sales 60000 210000 30000 300000 May sales 100000 350000 450000 June sales 40000 40000 Total cash collections 265000 310000 420000 995000 2 May sales 50000 =500000*10% June sales 160000 =200000*80% Accounts receivable 210000

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