Question

Shadee corporation expects to sell 620 sun shades in May and 320 in June. Each shade sells for $18. Shadee's beginning and ending finished goods inventories for May are 65 and 45 shades, respectively. The ending finished goods inventory for June will be 50 shades. It expects the following unit sales for the third quarter: July 560, August 470, September 430. Sixty percent of Shadee's sales are cash. Of the credit sales, 52 percent is collected in the month of the sale, 37 percent is collected during the following month, and 11 percent is never collected. Calculate Shadee's total cash receipts for August and September.

Answer 1

To calculate Shadee's total cash receipts for August and September, we need to determine the cash and credit sales for each month and the collection percentages. The cash sales for August and September are $282 and $258 respectively. The total cash receipts for August and September are $379.76 and $327.56 respectively.

Step-by-step explanation:

To calculate Shadee's total cash receipts for August and September, we need to determine the cash and credit sales for each month and the collection percentages. Given that 60% of Shadee's sales are cash, we can multiply the unit sales for August and September by the cash sales percentage to find the cash sales. For August: 470 x 0.60 = 282 (cash sales) and for September: 430 x 0.60 = 258 (cash sales).

Next, we calculate the credit sales for August and September by subtracting the cash sales from the total unit sales. For August: 470 - 282 = 188 (credit sales) and for September: 430 - 258 = 172 (credit sales).

Now, we apply the collection percentages to find the amount collected for each month. For August, 52% of the credit sales are collected in the same month, so the collected amount is: 188 x 0.52 = $97.76. For September, 37% of the credit sales from August are collected, so the collected amount is: 188 x 0.37 = $69.56. Adding the cash sales to the collected amounts, the total cash receipts for August are: 282 + 97.76 = $379.76. And for September: 258 + 69.56 = $327.56.