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 -- $330,000
May -- $530,000
June -- $210,000
Total -- $1,070,000
From past experience, the company has learned that 25% of a month's sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 15% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $260,000, and March sales totaled $290,000.
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?