Question
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
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) | $330,000 | $530,000 | $210,000 | $1,070,000 |
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 $260,000 and March sales totaled $290,000.
required:
1. 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?
April | May | June | Total | |
February sales | ||||
March sales | ||||
April sales | ||||
May sales | ||||
June sales | ||||
Total cash collections |
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