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) | $300,000 | $500,000 | $200,000 | $1,000,000 |
From past experience, the company
has learned that 20% of a month’s sales are collected in the month
of sale, another 70% 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
$230,000, and March sales totaled $260,000.
Required:
1. Prepare a schedule of expected cash collections from sales, by
month and in total, for the second quarter.
2. Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accounts receivable as of that date.
1.
Schedule of expected cash collections from sales
April | May | June | Total | |
February Sales | 230,000 x 10% = 23,000 | 23,000 | ||
March Sales | 260,000 x 20% = 52,000 | 260,000 x 10% = 26,000 | 78,000 | |
April Sales | 300,000 x 70% = 210,000 | 300,000 x 20% = 60,000 | 300,000 x 10% = 30,000 | 300,000 |
May Sales | 500,000 x 70% = 350,000 | 500,000 x 20% = 100,000 | 450,000 | |
June Sales | 200,000 x 70% = 140,000 | 140,000 | ||
Total cash collections | $285,000 | $436,000 | $270,000 | $991,000 |
2.
May sales (500,000 x 10%) | 50,000 |
June sales (200,000 x 30%) | 60,000 |
Total accounts receivable at June 30 | $110,000 |
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Silver Company makes a product that is very popular as a Mother’s Day gift. Thus, peak...
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) $300,000 $500,000 $200,000 $1,000,000 From past experience, the company has learned that 20% of a month’s sales are collected in the month of sale, another 70% are collected in the month following sale, and the...
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) $300,000 $500,000 $200,000 $1,000,000 From past experience, the company has learned that 20% of a month’s sales are collected in the month of sale, another 70% are collected in the month following sale, and the...
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) $500,000 $700,000 $240,000 $1,440,000 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...
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) $470,000 $670,000 $230,000 $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...
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) $330,000 $530,000 $210,000 $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...
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) $480,000 $680,000 $260,000 $1,420,000 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...
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) $300,000 $500,000 $200,000 $1,000,000 From past experience, the company has learned that 20% of a month’s sales are collected in the month of sale, another 70% are collected in the month following sale, and the...
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) $420,000 $620,000 $240,000 $1,280,000 From past experience, the company has learned that 20% of a month’s sales are collected in the month of sale, another 65% are collected in the month following sale, and the...
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) $440,000 $640,000 $220,000 $1,300,000 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...
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) $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...