Question

Silver Company makes a product that is very popular as a Mother’s Day gift. Thus, peak...

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.

     

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