Chapter 7 BRIEF EXERCISE 7-2 Schedule of Expected Cash Collections (CCS) Silver Company makes a product that is very popular as a Mother's Day gift. Thus, peak sales occur in May of each year. These peak sales are shown in the following sales budget for the second quarter: Budgeted sales ..... April $400,000 May $600,000 $300,000 Total $1.100.000 From past experience, the company has learned that 25% of a month's sales are collected in the month of sale, that another 65% is collected in the month following sale, and that the remaining 10% is collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totalled $380,000, and March sales totalled $360,000 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. BRIEF EXERCISE 7-3 Production Budget (CC6) Down Under Products, Lid., of Australia, has budgeted sales of its popular boomerang for the next four months as follows: Sales in Units April. May June July 50,000 75,000 90,000 80,000 The company is now in the process of preparing a production budget for the second quarter. Past experi- ence has shown that end-of-month inventory levels must equal 10% of the following month's sales. The inventory at the end of March was 5,000 units. (Australia's currency is Australian dollars.) Required: Prepare a production budget for the second quarte duced each month and for BRIEF EXERCISE 7-2 Schedule of Expected Cash Collections (CC5) Silver Company makes a product that is very popular as a Mother's Day gift. Thus, peak sales occur in May of each year. These peak sales are shown in the following sales budget for the second quarter: May June Budgeted sales ..... April $400,000 $600,000 Total $1.100.000 $300,000 From past experience, the company has learned that 25% of a month's sales are collected in the month of sale, that another 65% is collected in the month following sale, and that the remaining 10% is collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totalled $380,000, and March sales totalled $360,000. 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