Problem
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 sales budget for the second quarter given below
|
April
|
May
|
June
|
Total
|
|
Budgeted sales (all on account)
|
$300,000
|
$500,000
|
200,000
|
1,000,000
|
from past experience, the company has learned that 20% of month,s sales are collected in the month of sales, another 70% are collected in the month following sales, and the remaining 10% are collected in the second month following the sale. Bad debts are negligible and can be ignored. February sales totaled $230,000, and March sales totaled $260,000.
Required:
1. Prepare a schedule 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.