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Midwest Products

See attached problem regarding budget and expected cash collections.

Exercise 9-1 Schedule of Expected Cash Collections
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 Sep.
Budgeted sales (all on account) 600,000 900,000 500,000

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.

Required:
1. Prepare a schedule of expected cash collections from sales, by month and in total, for the third quarter.

2. Assume that the company will prepare a budgeted balance sheet as of September 30. Compute the accounts receivable as of that date.

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Exercise 9-1 Schedule of Expected Cash Collections
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 Sep.
Budgeted sales (all on account) 600,000 900,000 500,000

From past ...

Solution Summary

This solution is comprised of a detailed explanation to prepare a schedule of expected cash collections from sales, by month and in total, for the third quarter and compute the accounts receivable assume that the company will prepare a budgeted balance sheet as of September 30.

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