1.value: 3.12 points Silver Company makes a product that is very popular as a Mo
ID: 2653914 • Letter: 1
Question
1.value:
3.12 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:
April May June Total
Budgeted sales (all on account) $330,000 $530,000 $210,000 $1,070,000
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 $260,000, and March sales totaled $290,000.
Required:
1.
Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter.
2.
Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accounts receivable as of that date.
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Hint #1
Explanation / Answer
1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter.
2. Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accounts receivable as of that date
Accounts receivable as of that date = May Sale*15% + June Sale*(60%+15%)
Accounts receivable as of that date = 530000*15% + 210000*75%
Accounts receivable as of that date = $ 237000
Schedule of Expected Cash Collections April May June Quarter - Total February sales 39,000 39,000 March sales 174,000 43,500 217,500 April sales 82,500 198,000 49,500 330,000 May sales 132,500 318,000 450,500 June sales 52,500 52,500 Total cash collections 295,500 374,000 420,000 1,089,500Related Questions
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