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) $360,000 $560,000 $220,000 $1,140,000 From past experience, the company has learned that 30% of a month’s sales are collected in the month of sale, another 60% 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 $290,000, and March sales totaled $320,000. 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?

	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 $

	Total accounts receivable at June 30

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Answer 1

	April	May	June	Total
Total Sales	360,000	560,000	220,000	1,140,000
Schedule of Expected Cash Collection
	April	May	June	Total
February Sales	29,000			29,000
March sales	192,000	32,000		224,000
April Sales	108,000	216,000	36,000	360,000
May Sales		168,000	336,000	504,000
June Sales			66,000	66,000
Total cash collection	329,000	416,000	438,000	1,183,000
Accounts Receivable balance, June 30
Out of MAY SALES	56,000
Out of June Sales	154,000
Total Accounts receivable as on June 30	210,000