Prepare a schedule of expected cash collections from sales

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Reference no: EM131743817

Problem -

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)

$320,000

$520,000

$180,000

$1,020,000

From past experience, the company has learned that 30% of a month's sales are collected in the month of sale, another 65% are collected in the month following sale, and the remaining 5% are collected in the second month following sale. Bad debts are negligible and can he ignored. February sales totaled $250,000, and March sales totaled $280,000.

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

Reference no: EM131743817

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