Question

Exercise 8-1 Schedule of Expected Cash Collections [LO8-2] 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: Budgeted sales (all on account) April $450,000 May $650,000 June $250,000 Total $1,350,000 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 $380,000, and March sales totaled $410,000. Required: 1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. 2. What is the accounts receivable balance on June 30th? Complete this question by entering your answers in the tabs below. Required 1 Required 2 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 March sales April sales May sales June sales Total cash collections < Required 1 Required 2 >

Answer 1

Schedule of expected cash collection

	April	May	June	Total
February sales	380000*15% = 57000			57000
March sales	410000*60% = 246000	61500		307500
April sales	450000*25% = 112500	270000	67500	450000
May Sales		650000*25% = 162500	390000	552500
June sales			250000*25% = 62500	62500
Total Cash collection	415500	494000	520000	1429500

Account receivable = (650000*15%+250000*75%) = 97500+187500 = 285000