Fashion Jeans, Inc. sells two lines of jeans; Simple Life and Fancy Life. Simple

Question

Fashion Jeans, Inc. sells two lines of jeans; Simple Life and Fancy Life. Simple Life sells for $85, and Fancy Life sells for $100. The company sells all of its jeans on credit and estimates that 60% is collected in the month of the sale, 35% is collected in the following month, and the rest is considered to be uncollectible. The estimated sales for Simple are: January, 20,000 jeans; February, 27,500 jeans; and March, 25,000 jeans. The estimated sales for Fancy are: January, 18,000 jeans; February, 19,000; and March, 20,500 jeans. What are the expected cash receipts for the month of March?

$3,988,125

$2,125,000

$2,505,000

$4,175,000

Explanation / Answer

Answer : Answer '1' is correct. That is $ 3988125.

Simple Jeans January Febraury March Total Sales 20000 27500 25000 72500 Rate Per Unit 85 85 85 Sales in ($) 1700000 2337500 2125000 6162500 Cash Collection January 1020000 595000 0 1615000 Febraury 0 1402500 818125 2220625 March 0 0 1275000 1275000 Cash Collection 1020000 1997500 2093125 5110625 Fancy Jeans January Febraury March Total Sales 18000 19000 20500 57500 Rate Per Unit 100 100 100 Sales in ($) 1800000 1900000 2050000 5750000 Cash Collection January 1080000 630000 0 1710000 Febraury 0 1140000 665000 1805000 March 0 0 1230000 1230000 Cash Collection 1080000 1770000 1895000 4745000 Total Cash receipts 2100000 3767500 3988125 9855625

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