Silver Company makes a product that is very popular as a Mother’s Day gift. Thus, peak sales occur inMay of each year, as shown in the company’s sales budget for the second quarter given below:April May June TotalBudgeted sales (all on account) .................. $300,000 $500,000 $200,000 $1,000,000From past experience, the company has learned that 20% of a month’s sales are collected in the monthof sale, another 70% are collected in the month following sale, and the remaining 10% are collected inthe second month following sale. Bad debts are negligible and can be ignored. February sales totaled$230,000, and March sales totaled $260,000.Required:1. Prepare a schedule of expected cash collections from sales, by month and in total, for the secondquarter.2. Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accountsreceivable as of that date.
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.
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
Budgeted 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 month following sale.
$230,000, and March 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. Assume that the company will prepare a budgeted
receivable as of that date.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 4 images
