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 April May June Total Budgeted sales (all on account)$430,000 $630,000 $200,000 $1,260,000 From past experience, the company has learned that 25% of a month's sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 15% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $360,000, and March sales totaled $390,000 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 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 Silver Company Accounts receivable at June 30 May sales June sales Total accounts receivable at June 30

Explanation / Answer

1. Schedule of expected cash collection :

2. Calculate account receivable on june 30 :

April May June Total February sales 54000 54000 March sales 234000 58500 292500 April sales 107500 258000 64500 430000 May sales 157500 378000 535500 June sales 50000 50000 Total 395500 474000 492500 1362000

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