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) | $470,000 | $670,000 | $230,000 | $1,370,000 |
From past experience, the company has learned that 25% of a month’s sales are collected in the month of sale, another 65% 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 $400,000, and March sales totaled $430,000. |
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. |
Get Answers For Free
Most questions answered within 1 hours.