EXERCISE 8-1 Schedule of Expected Cash Collections (L02] Midwest Products is a wholesale distributor of leaf rakes. Thus, peak sales occur in August of cach year as shown in the company's sales budget for the third quarter, given below: Budgeted sales (all on account).. July August $600,000 $900,000 September Total $500,000 $2,000,000 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. May sales totaled S430,000, and June sales totaled $540,000. Required: 1. Prepare a schedule of expected cash collections from sales, by month and in total, for the third quarter. 2. Assume that the company will prepare a budgeted balance sheet as of September 30. Compute the accounts receivable as of that date. EXERCISE 8-2 Production Budget [L93] Crystal Telecom has budgeted the sales of its innovative mobile phone over the next four months as follows: Sales in Units July August September October 30,000 45,000 60,000 50,000 The company is now in the process of preparing a production budget for the third quarter. Past experience has shown that end-of-month finished goods inventories must equal 10% of the next month's sales. The inventory at the end of June was 3,000 units. Required: Prepare a production budget for the third quarter showing the number of units to be produced each month and for the quarter in total