Question

Getty Company expects sales for the first three months of next year to be $215,000,

$250,000 and $320,000, respectively. Getty expects 40 percent of its sales to be
cash and the remainder to be credit sales. The credit sales will be collected as
follows: 10 percent in the month of the sale and 90 percent in the following month.
and March

Answer 1

To calculate Getty Company's cash receipts for January, we need to first determine the total amount of sales for the month, which is $215,000. Since Getty expects 40% of its sales to be cash sales, we can calculate the cash receipts for January as follows:

Cash receipts = cash sales + cash collections on credit sales
Cash receipts = 40% x $215,000 + (10% x $215,000 x 1) + (90% x $250,000 x 0.1)
Cash receipts = $86,000 + $21,500 + $22,500
Cash receipts = $130,000

Therefore, Getty Company's cash receipts for January are expected to be $130,000.

To calculate the cash receipts for February, we need to first determine the total amount of sales for the month, which is $250,000. Since Getty expects 40% of its sales to be cash sales, we can calculate the cash receipts for February as follows:

Cash receipts = cash sales + cash collections on credit sales
Cash receipts = 40% x $250,000 + (10% x $215,000 x 0.9) + (90% x $250,000 x 0.1)
Cash receipts = $100,000 + $19,350 + $22,500
Cash receipts = $141,850

Therefore, Getty Company's cash receipts for February are expected to be $141,850.

To calculate the cash receipts for March, we need to first determine the total amount of sales for the month, which is $320,000. Since Getty expects 40% of its sales to be cash sales, we can calculate the cash receipts for March as follows:

Cash receipts = cash sales + cash collections on credit sales
Cash receipts = 40% x $320,000 + (10% x $250,000 x 0.9) + (90% x $320,000 x 0.1)
Cash receipts = $128,000 + $20,250 + $28,800
Cash receipts = $177,050

Therefore, Getty Company's cash receipts for March are expected to be $177,050.