Question

the company’s sales budget for the second quarter given below:

	April	May	June	Total
Budgeted sales (all on account)	$320,000	$520,000	$180,000	$1,020,000

From past experience, the company has learned that 30% of a month’s sales are collected in the month of sale, another 65% are collected in the month following sale, and the remaining 5% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $250,000, and March sales totaled $280,000.

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?

Answer 1

Answer-1)-

Statement of cash collection from debtors
Particulars	April	May	June	Total
Sales $	320000	520000	180000	1020000
Cash Collection
February sales $	250000*5%=12500			12500
March sales $	280000*65%=182000	280000*5%=14000		196000
April sales $	320000*30%=96000	320000*65%=208000	320000*5%=16000	320000
May sales $		520000*30%=156000	520000*65%=338000	494000
June sales $			180000*30%= 54000	54000
Total collection	290500	378000	408000	1076500

Answer-2)-

ACCOUNTS RECEIVABLE AT JUNE 30
PARTICULARS		Amount
		$
May sales	520000*5%	26000
June sales	180000*70%	126000
Total		152000