Midwest Products

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

    July

    August

    September

    Total

    Budgeted sales (all on account)

    $ 600,000

    $ 900,000

    $ 500,000

    $ 2,000,000

    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. (Do not round intermediate calculations. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)

    2.

    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.)

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