Shadee Corp. expects to sell 630 sun visors in May and 370 in June. Each visor s

Question

Shadee Corp. expects to sell 630 sun visors in May and 370 in June. Each visor sells for $14. Shadee’s beginning and ending finished goods inventories for May are 80 and 40 units, respectively. Ending finished goods inventory for June will be 55 units. It expects the following unit sales for the third quarter: July 530 August 460 September 440 Sixty percent of Shadee’s sales are cash. Of the credit sales, 54 percent is collected in the month of the sale, 37 percent is collected during the following month, and 9 percent is never collected. Required: Calculate Shadee’s total cash receipts for August and September. (Do not round your intermediate calculations. Round your answers to the nearest whole dollar.)

Explanation / Answer

Total Cash Receipts for August and September are as follows:

Calculations of Sales and Amount to be received:

The Cash Percentage is already given, rest would be credit sales which will be 40%.

Out of 40%, 54% (i.e) 40*54%=21.60% will be received same month

Out of 40%, 37% (i.e) 40*37%=14.80% will be received during the following month

Out of 40%, 9% (i.e) 40*9%=3.60% will be never collected.

Cash Receipts for August and September will be as follows

1. Cash Receipt of July for 14.80% of credit sales made = 7420*14.80%=1098.16

2. Cash Receipt of August for 60% of cash sales made = 6440*60%=3864

3. Cash Receipt of August for 21.60% of Credit sales = 6440*21.60%=1391.04

4. Cash Receipt of August (received in Sep) for 14.80% of credit sales made = 6440*14.80%=953.12

5. Cash Receipt of September for 60% of cash sales made = 6160*60%=3696

6. Cash Receipt of September for 21.60% of Credit sales = 6160*21.60%=1330.56

So Sums it upto 1098.16+3864+1391.04+953.12+3696+1330.56=$12,333 (rounding upto nearest whole dollar)

Month May June July August September Sales Units 630 370 530 460 440 Sales Amount 8820 5180 7420 6440 6160 Cash 60% 5292 3108 4452 3864 3696 Same month 21.60% 1905.12 1118.88 1602.72 1391.04 1330.56 Next Month 14.80% 1305.36 766.64 1098.16 953.12 911.68 Never 3.60% 317.52 186.48 267.12 231.84 221.76

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