What is a schedule of expected cash collections


Problem: The 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 $500,000

May $700,000

June $240,000

Total Budgeted sales (all on account) $1,440,000

From past experience, the company has learned that 20% of a month's sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 20% are collected in the second month following sale. February sales totaled $430,000, and March sales totaled $460,000.

What is a schedule of expected cash collections from sales, by month and in total, for the second quarter?

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Accounting Basics: What is a schedule of expected cash collections
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