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: Budgeted sales (all on account) April $420,000 May $620,000 June $240,000 Total $1,280,000 From past experience, the company has learned that 20% of a month's sales are collected in the month of sale, another 65% 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 $350,000, and March sales totaled $380,000. 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. Required 1 Required 2 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 < Required 1 Required 2 >

Answer 1

1
	April	May	June	Total
February Sales	52500			52500
March sales	247000	57000		304000
April sales	84000	273000	63000	420000
May sales		124000	403000	527000
June sales			48000	48000
Total cash collections	383500	454000	514000	1351500
2
May sales uncollected	93000	=620000*15%
June sales uncollected	192000	=240000*80%
Total accounts Receivable at June 30	285000
Workings:
	April	May	June
February Sales	=350000*15%
March sales	=380000*65%	=380000*15%
April sales	=420000*20%	=420000*65%	=420000*15%
May sales		=620000*20%	=620000*65%
June sales			=240000*20%