Exercise 9-1 Schedule of Expected Cash Collections [LO2]
Peak sales for Midwest Products, a wholesale distributor of leaf rakes, occur in August. The company's sales budget for the third quarter showing these peak sales is given below:
July August September Total
Budgeted sales (all on account) $ 600,000 $ 900,000 $ 500,000 $ 2,000,000
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. Bad debts are negligible and can be ignored. May sales totaled $430,000, and June sales totaled $540,000.
Prepare a schedule of expected cash collections from sales, by month and in total, for the third quarter. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
Assume that the company will prepare a budgeted balance sheet as of September 30. Compute the accounts receivable as of that date. (Omit the "$" sign in your response.)
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