Silver Company makes a product with peak sales in May of each year. Its sales budget for the second quarter is given below: Budgeted sales (all on account) April $ 500,000 May $ 700,000 June $ 240,000 Total $ 1,440,000 The company estimates 20% of a month's sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 20% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $430,000, and March sales totaled $460,000. 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?
Silver Company makes a product with peak sales in May of each year. Its sales budget for the second quarter is given below: Budgeted sales (all on account) April $ 500,000 May $ 700,000 June $ 240,000 Total $ 1,440,000 The company estimates 20% of a month's sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 20% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $430,000, and March sales totaled $460,000. 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?
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.
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Transcribed Image Text:Silver Company makes a product with peak sales in May of each year. Its sales budget for the second quarter is given below:
Budgeted sales (all on account)
April
$ 500,000
May
$ 700,000
June
$ 240,000
Total
$ 1,440,000
The company estimates 20% of a month's sales are collected in the month of sale, another 60% are collected in the month following
sale, and the remaining 20% are collected in the second month following sale. Bad debts are negligible and can be ignored. February
sales totaled $430,000, and March sales totaled $460,000.
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?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
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
0
May sales
0
June sales
0
Total cash collections
$
0 $
0 $
0 $
0
< Required 1
Required 2 >
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