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) |
$470,000 |
$670,000 |
$230,000 |
$1,370,000 |
|
From past experience, the company has learned that 25% of a
month’s sales are collected in the month of sale, another 65% 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 $400,000, and
March sales totaled $430,000.
Required:
1. Prepare a schedule of expected cash collections from sales,
by month and in total, for the second quarter.
|
|
| Schedule of Expected Cash
Collections |
|
April |
May |
June |
Total |
| February sales |
|
|
|
$0 |
| March sales |
|
|
|
0 |
| April sales |
|
|
|
0 |
| May sales |
|
|
|
0 |
| June sales |
|
|
|
0 |
| Total cash collections |
$0 |
$0 |
$0 |
$0 |
|
2. What is the accounts receivable balance on June 30th?
|
|
| Total accounts receivable
at June 30 |
|
