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)	$380,000	$580,000	$200,000	$1,160,000

From past experience, the company has learned that 20% of a month’s sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 20% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $310,000, and March sales totaled $340,000.

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?

evue balance O ule Sou Answer is not complete. 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 $ 62,000 204,000 68,000 February sales March sales April sales May sales June sales Total cash collections 62,000 272,000 76,000228,00076,000380,000 348000 348,000 $ 342,000 296,000 $ 424,000 $ 1,062,000 Required 1 Required 2> くPrev 1016 İİ, Next>

Answer 1

Schedule of expected cash collections
	April	May	June	Total
February sales	$            62,000			$       62,000
March sales	$         2,04,000	$            68,000		$   2,72,000
April sales	$            76,000	$         2,28,000	$         76,000	$   3,80,000
May sales		$         1,16,000	$     3,48,000	$   4,64,000
June sales			$         40,000	$       40,000
Total cash collections	$         3,42,000	$         4,12,000	$     4,64,000	$ 12,18,000
Total Accounts receivables at June 30 = $276000
Workings:
Schedule of expected cash collections
	April	May	June	Total
February sales	=310000*0.2
March sales	=340000*0.6	=340000*0.2
April sales	=380000*0.2	=380000*0.6	=380000*0.2
May sales		=580000*0.2	=580000*0.6
June sales			=200000*0.2
Total Accounts receivables at June 30 = ($580000*0.2) + ($200000*0.8) = $276000