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: Total $1,140,000 June Budgeted sales (all on account) $360,000 $560,000 $220,000 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 $290,000, and March sales totaled $320,000 Required 1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter Silver Company Schedule of Expected Cash Collections April May June Total ebruary sales March sales April sales May sales June sales Total cash collection:s 2. Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accounts receivable as of that date Silver Company Accounts receivable at June 30 May sales June sales Total accounts receivable at June 30$

Explanation / Answer

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2.

Silver Company Schedule of expected cash collections April May June Total February sales $290,000*10% = $29,000 $        29,000 March sales $320,000*60% = $192,000 $320,000*10% = $32,000 $     224,000 April sales $360,000*30% = $108,000 $360,000*60% = $216,000 $360,000*10% = $36,000 $     360,000 May sales $560,000*30% = $168,000 $560,000*60% = $336,000 $     504,000 June sales $220,000*30% = $66,000 $        66,000 Total Cash Collections $                                   329,000 $                                   416,000 $                                   438,000 $ 1,183,000

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