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) $ 430,000 $ 630,000 $ 200,000 $ 1,260,000 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 $360,000, and March sales totaled $390,000.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Exercise 8-1 (Algo) Schedule of Expected Cash Collections [LO8-2]
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) | $ 430,000 | $ 630,000 | $ 200,000 | $ 1,260,000 |
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.
Required:
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?
![Exercise 8-1 (Algo) Schedule of Expected Cash Collections [LO8-2]
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
$ 430,000
Мay
June
Total
Budgeted sales (all on account)
$ 630,000
$ 200,000
$ 1,260,000
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 $360,000, and March sales totaled $390,000.
Required:
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?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter.
Schedule of Expected Cash Collections
April
May
June
Total
February sales
$
March sales
April sales
May sales
June sales
Total cash collections
$
$
$
$
Required 1
Required 2
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