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:

 

Â	April	May	June	Total
Budgeted sales (all on account)	$420,000	$620,000	$240,000	$1,280,000
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From past experience, the company has learned that 20% of a month’s sales are collected in the month of sale, another 65% 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 $350,000, and March sales totaled $380,000.

 

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.

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• Anonymous answered this 8 minutes later660 answers• 65% Best Answer
  

  Â	April	May	June	Total	July	August
  Sales Budet	420,000.00	620,000.00	240,000.00	1,280,000.00	Â	Â
  Collected in same Month @20%	84,000.00	124,000.00	48,000.00	256,000.00	Â	Â
  Collected in next Month @65%	Â	273,000.00	403,000.00	676,000.00	156,000.00	Â
  Collected in next to next Month @15%	Â	Â	63,000.00	63,000.00	93,000.00	36,000.00
  Collection of Feb Month Sales(350,000*15%)	52,500.00	Â	Â	52,500.00	Â	Â
  Collection of March Month Sales In April 380,000*65% In May 380,000*15%	247,000.00	57,000.00	Â	304,000.00	Â	Â
  Cash Collected in the Month	383,500.00	454,000.00	514,000.00	1,351,500.00	Â	Â
  Â	Â	Â	Â	Â	Â	Â
  Â	Â	Â	Â	Â	Â	Â
  Accounts receivable as on 30 June are sales amount to be collected in July and August(156,000+93,000+36,000)	285,000.00	Â	Â

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