Question

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

300, 00

$500, 006

$200, 006

$1, 090, 090

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. 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?

Complete this question by entering your answers in the tabs below.

Answer 1

Req 1		April	May	June	Total
	Total Sales	$                    490,000	$                  690,000	$                220,000	$                           1,400,000
	Schedule of Expected Cash Collection
		April	May	June	Total
	February sales	$                      63,000			$                                 63,000
		(420000*15%)
	March Sales	$                    270,000	$                    67,500		$                               337,500
		(450000*60%)	(450000*15%)
	April Sales	$                    122,500	$                  294,000	$                   73,500	$                               490,000
		(490000*25%)	(490000*60%)	(490000*15%)
	May Sales		$                  172,500	$                414,000	$                               586,500
			(690000*25%)	(690000*60%)
	June Sales			$                   55,000	$                                 55,000
				(220000*25%)
	Total cash collection	$                    455,500	$                  534,000	$                542,500	$                           1,532,000
Req 2	Accounts Receivable balance, June
	Out of May Sales	$                    103,500	(690000-586500)
	Out of June Sales	$                    165,000	(220000-55000)
	Total Accounts receivable as on June 30	$                    268,500

Req 1

Schedule of Expected Cash Collection
	April	May	June	Total
February sales	$                      63,000			$                                 63,000

March Sales

$                    270,000

$                    67,500

$                               337,500

April Sales

$                    122,500

$                  294,000

$                   73,500

$                               490,000

May Sales

$                  172,500

$                414,000

$                               586,500

June Sales

$                   55,000

$                                 55,000

Total cash collection

$                    455,500

$                  534,000

$                542,500

$                           1,532,000

Req 2

Out of May Sales	$                    103,500	(690000-586500)
Out of June Sales	$                    165,000	(220000-55000)
Total Accounts receivable as on June 30	$                    268,500