Silver Company makes a product that is very popular as a Mother’s Day gift. Thus, peak sales occur in May of each year, ad shown in the company’s sales budget for the second quarter given below:

From past experience, the company has learned that 20% of 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. 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 second quarter.

2:         Assume that the company will prepare a budgeted balance sheet as of June 30. Compare the accounts receivable as of that date.

May Total June April S1,000,000 Budgeted sales (all account) $300,000 on $500,000 S200,000