EXERCISE 81 Schedule of Expected Cash Collections L08-29 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 May June Total $300,000 $500,000 $200,000 $1,000,000 Budgeted sales (all on account) 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. Using Schedule 1 as your guide, prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. 2. What is the accounts receivable balance on June 30th? EXERCISE 8-2 Production Budget L08-3 Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows: April May June July Unit Sales 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 experience has shown that end-of- month inventory levels must equal 10% of the following month's unit sales. The inventory at the end of March was 5,000 units. Required: Using Schedule 2 @ as your guide, prepare a production budget by month and in total, for the second quarter