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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: Budgeted sales (all on account) April $300,000 May $500,000 June $200,000 Total $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. Total 14,000 232,500 February sales March sales April sales May sales Schedule of Expected Cash Collections April May June $ 14,000 $ 217,000 15,500 87,500 245,000 17,500 137,500 385,000 47,500 $ 318,500 $ 398,000 $ 450,000 $ 350,000 522,500 47,500 1,166,500 June sales Total cash collections 2. Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accounts receivable as of that date. May sales June sales Total accounts receivable at June 30 $ 0 Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout South East Asia. Three cubic centimeters (cc) of solvent H300 are required to manufacture each unit of Supermix, one of the company's products. The company is now planning raw materials needs for the third quarter, the quarter in which peak sales of Supermix occur. To keep production and sales moving smoothly, the company has the following inventory requirements: a. The finished goods inventory on hand at the end of each month must be equal to 3,000 units of Supermix plus 20% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 10,000 units. b. The raw materials inventory on hand at the end of each month must be equal to one-half of the following month's production needs for raw materials. The raw materials inventory on June 30 is budgeted to be 54,000 cc of solvent H300. C. The company maintains no work in process inventories. A sales budget for Supermix for the last six months of the year follows. July August September October November December Budgeted Sales in Units 35,000 40,000 50,000 30,000 20,000 10,000 Required: 1. Prepare a production budget for Supermix for the months July, August, September, and October. September October 30,000 50,000 Pearl Products Limited Production Budget July Budgeted unit sales 35,000 Add: Desired units of ending finished goods inventory 11,000 Total needs 46,000 Less: Units of beginning finished goods inventory 10,000 Required production in units 36,000 9,000 August 40,000 13,000 53,000 11,000 42,000 59,000 13,000 46,000 7,000 37,000 9,000 28,000 3. Prepare a direct materials budget showing the quantity of solvent H300 to be purchased for July, August, and September, and for the quarter in total. Pearl Products Limited Direct Materials Budget July Units of raw materials needed to meet production August September Third Quarter Total units of raw materials needed Units of raw materials to be purchased