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 $350,000 May $530,000 June $210,000 Total $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. 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 0 S 0 % 0 % 0 % 0 0 Required 1 Required 2 >

Answer 1

Schedule of cash collection

	April	May	June	Total
February sales	260000*15% = 39000			39000
March sales	290000*60% = 174000	43500		217500
April sales	330000*25% = 82500	198000	49500	330000
May sales		530000*25% = 132500	318000	450500
June sales			210000*25% = 52500	52500
Total	295500	374000	420000	1089500

Account receivable = (530000*15%+210000*75%) = $237000