Question

"hadee Corp. expects to sell 600 sun visors in May and 440 in June. Each visor sells for $15. Shadee’s beginning and ending finished goods inventories for May are 65 and 55 units, respectively. Ending finished goods inventory for June will be 55 units.It expects the following unit sales for the third quarter:July 530August 450 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

Instructions are below.

Step-by-step explanation:

Giving the following information:

Sales:

July= 530 units

August= 450 units

September= 430 units

60% of sales are in cash.

Of the 40% remaining, 52% is collected in the month of the sale and 39% in the following month.

Cash collections= cash from the month + cash from the previous month

August:

Sales in cash= (450*$15)*0.60= 4,050

Sales in credit= ($4,050*0.4)*0.52= 842.4

Sales in credit from July= [(530*$15)*0.4]*0.39= 1,240.2

Total= $6,132.6

September:

Sales in cash= (430*$15)*0.60= 3,870

Sales in credit= ($3,870*0.4)*0.52= 804.96

Sales in credit from July= [(4,050*0.4]*0.39= 631.8

Total= $5,306.76