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) 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. 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?
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:
Budgeted sales (all on account)
April
May
June
Total
$ 360,000 $ 560,000 $ 220,000 $ 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.
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?
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Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter.
Schedule of Expected Cash Collections
April
May
June
Total
February sales
$
0
March sales
0
April sales
May sales
108,000
168,000
108,000
168,000
June sales
66,000
66,000
Total cash collections
$
108,000 $ 168,000
$ 66,000
$
342,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8085b687-543c-454c-bf1e-cd73e8339744%2Fa48c1a2c-e197-4859-b370-341ff4003c80%2Fklnr4an_processed.png&w=3840&q=75)
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