Question
9-1 Silver Company makes a product that is very popular as a Mothers Day gift. Thus, peak sales occur in May of each year, as
9-1
Silver Company makes a product that is very popular as a Mothers Day gift. Thus, peak sales occur in May of each year, as shown in the companys 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 months 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.
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. 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 |
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