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) $ 557,000 $ 806,000 $476,000 $ 1,839,000
From past experience, the company has learned that 20% of a month's sales are collected in the month of sale, another 75% 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 $421,000, and March sales totaled $503,000.
Requirement: Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter.