Exercise 8-1 Schedule of Expected Cash Collections [LO8-2]

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)	$430,000	$630,000	$200,000	$1,260,000

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 $360,000, and March sales totaled $390,000.

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. What is the accounts receivable balance on June 30th?

Total accounts receivable at June 30

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