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)	$430,000	$630,000	$200,000	$1,260,000

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 $360,000, and March sales totaled $390,000.

Required:

1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter.

Schedule of Expected Cash Collections:

	April	May	June	Total
February Sales
March Sales
April Sales
May Sales
June Sales
Total Cash Collections

2. What is the accounts receivable balance on June 30th?

Answer 1

Answer:-1)-

Silver Company
Schedule of expected cash collections from sale
Particulars	April	May	June	Total
February sales	$360000*15%=$54000	0	0	54000
March sales	$390000*60%=$234000	$390000*15%=$58500	0	292500
April sales	$430000*25%=$107500	$430000*60%=$258000	$430000*15%=$64500	430000
May sales	0	$630000*25%=$157500	$630000*60%=$378000	535500
June sales	0	0	$200000*25%=$50000	50000
Total cash collections	395500	474000	492500	1362000

2)-

The accounts receivable balance on june 30^th = ($630000*15%)+($200000*75%)

=$94500+$150000=$244500