Question
In: Accounting
Exercise 7-1 Schedule of Expected Cash Collections [LO7-2] Silver Company makes a product that is very...
Exercise 7-1 Schedule of Expected Cash Collections [LO7-2]
|
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 | |
| Budgeted sales (all on account) | $410,000 | $610,000 | $210,000 | $1,230,000 |
|
From past experience, the company has learned that 25% of a month’s 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 $340,000, and March sales totaled $370,000. |
| 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. |
Solutions
Expert Solution
Answer:-1)-
| Statement of cash collection from debtors | ||||||
| Particulars | April | May | June | Total | ||
| Sales $ | 410000 | 610000 | 210000 | 1230000 | ||
| Cash Collection | ||||||
| 25% in month of sale | 410000*25% =102500 | 610000*25% =152500 | 210000*25% =52500 | 307500 | ||
| 60% in following month of sale | 370000*60% =222000 | 410000*60% =246000 | 610000*60% =366000 | 834000 | ||
| 15% in the second month following sale | 340000*15% =51000 | 370000*15% =55500 | 410000*15% =61500 | 168000 | ||
| Total collection | 375500 | 454000 | 480000 | 1309500 | ||
Explanation:-
| Statement of cash collection from debtors | ||||||
| Particulars | February | March | April | May | June | Total |
| Sales $ | 340000 | 370000 | 410000 | 610000 | 210000 | 1230000 |
| Cash Collection | ||||||
| 25% in month of sale | 340000*25% =85000 | 370000*25% =92500 | 410000*25% =102500 | 610000*25% =152500 | 210000*25% =52500 | 307500 |
| 60% in following month of sale | 340000*60% =204000 | 370000*60% =222000 | 410000*60% =246000 | 610000*60% =366000 | 834000 | |
| 15% in the second month following sale | 340000*15% =51000 | 370000*15% =55500 | 410000*15% =61500 | 168000 | ||
| Total collection | 85000 | 296500 | 375500 | 454000 | 480000 | 1309500 |
2)-Accounts receivable on June 30:-
May month =$610000*15% =$91500
June month =$210000*75% =$157500
ekkarill92 answered 1 year agoRelated Solutions
Exercise 7-1 Schedule of Expected Cash Collections [LO7-2] Silver Company makes a product that is very...
Exercise 7-1 Schedule of Expected Cash Collections [LO7-2]
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
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June
Total
Budgeted sales (all
on account)
$370,000
$570,000
$180,000
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From past experience, the company
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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
Budgeted sales (all on account)
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Exercise 8-1 Schedule of Expected Cash Collections [LO8-2] Silver Company makes a product that is very...
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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
Budgeted sales (all on account)
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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
Budgeted sales (all on account) . . . . . . . . .
$300,000
$500,000
$200,000
$1,000,000
From past experience, the company has learned that 20% of a
month’s sales are...
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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
Budgeted sales (all on account)
$410,000
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