Question

Shadee Corp. expects to sell 640 sun visors in May and 350 in June. Each visor sells for $13. Shadee’s beginning and ending finished goods inventories for May are 65 and 55 units, respectively. Ending finished goods inventory for June will be 50 units. It expects the following unit sales for the third quarter: July 515 August 490 September 430 Sixty percent of Shadee’s sales are cash. Of the credit sales, 52 percent is collected in the month of the sale, 39 percent is collected during the following month, and 9 percent is never collected. Required: Calculate Shadee’s total cash receipts for August and September.

Answer 1

Shadee’s total cash receipts for August is $6,191

Shadee’s total cash receipts for September is $5,561

Step-by-step explanation:

Cash receipts for August = 60% sales in August + 52% credit sales of August + 39% credit sales of July

= 60%*($13*490)+ 52%*40%*($13*490)+39%*40%*($13*515)=$6,191

Cash receipts for September = 60% sales in September + 52% credit sales of September + 39% credit sales of August = 60%*($13*430)+ 52%*40%*($13*430)+39%*40%*($13*515) = $5,561