Question

Memphis Company anticipates total sales for April, May, and June of $970,000, $1,070,000, and $1,120,000 respectively. Cash sales are normally 20% of total sales. Of the credit sales, 40% are collected in the same month as the sale, 55% are collected during the first month after the sale, and the remaining 5% are not collected. Compute the amount of cash received from total sales during the month of June.Multiple Choice$829,200.$730,400.$983,200.$1,053,200.$769,200.

Answer 1

Total cash collection= $1,053,200

Step-by-step explanation:

Giving the following information:

Sales:

April $970,000

May $1,070,000

June $1,120,000

Cash sales are normally 20% of total sales. Of the credit sales, 40% are collected in the same month as the sale, 55% are collected during the first month after the sale, and the remaining 5% are not collected.

To calculate the total cash collection for June, we need to use the following structure:

Cash collection June:

Sales in cash from June= (1,120,000*0.2)= 224,000

Sales in account from June= (1,120,000*0.8)*0.4= 358,400

Sales in account from May= (1,070,000*0.8)*0.55= 470,800

Total cash collection= $1,053,200