Question

HW 5 (Chapter 8) i Saved Help Save & Exit Submit Check my work 1 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: 50 points Budgeted sales (all on account) April S470,000 May $670,000 June $230,000 Total $1,370,000 From past experience, the company has learned that 25% of a month's sales are collected in the month of sale, another 65% 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 $400,000, and March sales totaled $430,000. 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 Mc

Answer 1

Solution

Schedule of Expected Cash Collections
	April	May	June	Total
February Sales	$ 40,000			$ 40,000
March Sales	$ 279,500	$ 43,000		$ 322,500
April Sales	$ 117,500	$ 305,500	$ 47,000	$ 470,000
May Sales		$ 167,500	$ 435,500	$ 603,000
June Sales			$ 57,500	$ 57,500
Total Cash Collection	$ 437,000	$ 516,000	$ 540,000	$ 1,493,000

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Total Receivables at June 30

$ 239,500

Working

	April	May	June
February Sales	400000 x 10%
March Sales	430000 x 65%	430000 x 10%
April Sales	=470000*25%	=470000*65%	=470000*10%
May Sales		=670000*25%	=670000*65%
June Sales			=230000*25%

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Accounts Receivables Balance
Balance of may sales	(10% of sale)	$ 67,000
Balance of June Sale	(75% of sale)	$ 172,500
Total Receivables at June 30	$ 239,500