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:
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April
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May
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June
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Total
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Budgeted sales (all on account)
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$320,000
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$520,000
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$180,000
|
$1,020,000
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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.