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:
aprilmayjunetotal
budgeted
sales (all on account) $390,000$590,000$230,000$1,210,000< br />
from past experience, the company has learned that 25% of a month’s sales are collected in the month of sale, another 60% 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 $320,000, and march sales totaled $350,000.

required
1. prepare a schedule of expected 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,

1. Cash collection schedule in Quarter 2 as followed:

April: $355,500

May: $434,000

June: $470,000

Total cash collections from sales in Q2: 355.5K + 434K + 470K = $1,259,500

2. Account receivable from sales as at 30th June: $261,000

Explanation:

1. The April collection will be from : 25% of April's sales + 60% of March's sales + 15% of February sales = 25% x 390K + 60% x 350K + 15% x 320K = $355,500;

   The May collection will be from : 25% of May's sales + 60% of April's sales + 15% of March sales = 25% x 590K + 60% x 390K + 15% x 350K = $434,00

  The June collection will be from : 25% of June's sales + 60% of May's sales + 15% of April sales = 25% x 230K + 60% x 590K + 15% x 390K = $470,000

2. The account receivable as at 30th June will include: 75% of June's sales + 15% of May's sales = 75% x 230K + 15% x 590K = $261,000

answer: g

explanation: g

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