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)	$450,000	$650,000	$250,000	$1,350,000

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 $380,000, and March sales totaled $410,000.

Required:

1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter.

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 $0 March sales 0 April sales 0 May sales 0 June sales 0 Total cash collections $0 $0 $0 $0

2. What is the accounts receivable balance on June 30th?

Answer 1

Requirement: 1 Schedule of Expected cash colletion April May June February sales 57000 March sales 246000 61500 April Sales 112500 270000 67500 May Sales 162500 390000 June sales 62500 Total Cash Collections 415500 494000 520000 Total 57000 307500 450000 552500 62500 1429500 Requirement: 2 Silver Company Accounts Receivable at june 30: May sales $650,000 * 15% = June sales $250,000 * (60% +15%) = Total Accounts receivable at june 30 97500 187500 285000