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 $320,000 Budgeted sales (all on account) May $520,000 June $180,000 Total $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. $ February sales March sales April sales May sales June sales Total cash collections Silver Company Schedule of Expected Cash Collections April May June $ 12,500 182,000 14,000 96,000 182,000 14,000 156,000 338,000 54,000 $ 290,500 $ 352,000 $ 406,000 Total 12,500 196,000 292,000 494,000 54,000 1,048,500 $

Answer 1

schedule of cash collection
particular	April	may	June	total
February sale	12,500			12,500
march sale	182,000	14,000		196,000
April sale	96,000	208,000	16,000	320,000
may sale		156,000	338,000	494,000
June sale			306,000	306,000
total cash collection	290,500	378,000	660,000	1,328,500