the company’s sales budget for the second quarter given below:
April | May | June | Total | |
Budgeted sales (all on account) | $320,000 | $520,000 | $180,000 | $1,020,000 |
From past experience, the company has learned that 30% of a month’s sales are collected in the month of sale, another 65% are collected in the month following sale, and the remaining 5% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $250,000, and March sales totaled $280,000.
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?
Answer-1)-
Statement of cash collection from debtors | ||||
Particulars | April | May | June | Total |
Sales $ | 320000 | 520000 | 180000 | 1020000 |
Cash Collection | ||||
February sales $ | 250000*5%=12500 | 12500 | ||
March sales $ | 280000*65%=182000 | 280000*5%=14000 | 196000 | |
April sales $ | 320000*30%=96000 | 320000*65%=208000 | 320000*5%=16000 | 320000 |
May sales $ | 520000*30%=156000 | 520000*65%=338000 | 494000 | |
June sales $ | 180000*30%= 54000 | 54000 | ||
Total collection | 290500 | 378000 | 408000 | 1076500 |
Answer-2)-
ACCOUNTS RECEIVABLE AT JUNE 30 | ||
PARTICULARS | Amount | |
$ | ||
May sales | 520000*5% | 26000 |
June sales | 180000*70% | 126000 |
Total | 152000 |
the company’s sales budget for the second quarter given below: April May June Total Budgeted sales...
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