Budgeted sales (all on account) April May June $360,000 $560,000 $220,000 Total $1,140,000 From past experience, the company has learned that 30% of a month's sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 10% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $290,000, and March sales totaled $320,000.
Budgeted sales (all on account) April May June $360,000 $560,000 $220,000 Total $1,140,000 From past experience, the company has learned that 30% of a month's sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 10% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $290,000, and March sales totaled $320,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
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Transcribed Image Text:2. Assume that the company will prepare a budgeted balance sheet as of June 30.
Compute the accounts receivable as of that date.
Silver Company
Accounts receivable at June 30
May sales
June sales
Total accounts receivable at June 30
Transcribed Image Text: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:
Budgeted sales (all on
account)
From past experience, the company has learned that 30% of a month's sales are
collected in the month of sale, another 60% are collected in the month following sale,
and the remaining 10% are collected in the second month following sale. Bad debts are
negligible and can be ignored. February sales totaled $290,000, and March sales
totaled $320,000.
February sales
March sales
April
May
June
$360,000 $560,000 $220,000
Required:
1. Prepare a schedule of expected cash collections from sales, by month and in total, for
the second quarter.
April sales
May sales
June sales
Total cash collections
Silver Company
Schedule of Expected Cash Collections
April
May
$
0 $
0 $
Total
$1,140,000
June
0
$
$
Total
0
0
0
0
0
0
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