Midwest Products is a wholesale distributor of leaf rakes. Thus, peak sales occu

Question

Midwest Products is a wholesale distributor of leaf rakes. Thus, peak sales occur in August of each year as shown in the company%u2019s sales budget for the third quarter, given below:

From past experience, the company has learned that 25% of a month%u2019s sales are collected in the month of sale, another 70% 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 be ignored. May sales totaled $420,000, and June sales totaled $536,000.

Prepare a schedule of expected cash collections from sales, by month and in total, for the third quarter. (Do not round intermediate calculations. 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. (Do not round intermediate calculations. Omit the "$" sign in your response.)

July August September Total   Budgeted sales (all on account) $552,000     $ 814,000     $ 485,000     $1,851,000

Explanation / Answer

Hi,

Please find the answers as follows:

Part 1:

Part 2:

From August Sales = 814000*.05 = 40700

+

From September Sales = 485000*.75 = 363750

Accounts Receivables Balance = 40700 + 363750 = 404450

Thanks.

July August September Total May Sales 21000

21000 June Sales 375200 26800
402000 July Sales 138000 386400 27600 552000 August Sales
203500 569800 773300 September Sales

121250 121250 Total 534200 616700 718650 1869550

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