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Silver Company makes a product that is very popular as a Mother’s Day gift. Thus, peak...

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Accounting

Silver Company makes a product that is very popular as aMother’s Day gift. Thus, peak sales occur in May of each year, asshown in the company’s sales budget for the second quarter givenbelow:

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

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

Required:

1. Prepare a schedule of expected cash collections from sales,by month and in total, for the second quarter.

2. What is the accounts receivable balance on June 30th?

Answer & Explanation Solved by verified expert
4.4 Ratings (853 Votes)
April20 of current sales 70 of march sales 10 of februarysalesMay20 of current sales 70 of april    See Answer
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