Prepare a schedule of expected cash collections from sales

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Reference no: EM13170336

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
Budget sales (all on account)	$300,000	$500,000	$200,000	$1,000,000

From past experience, the company has learned that 20% of a month's sales are collected in the month of sale, another 70% are collected in the month following sale, and the remaining 10% are collected in the second following sale. Bad debts are negligible and can be ignored. February sales totaled $230,000, and March sales totaled $260,000.

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.

Reference no: EM13170336

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