Shadee Corp. expects to sell 620 sun visors in May and 390 in June. Each visor s

Question

Shadee Corp. expects to sell 620 sun visors in May and 390 in June. Each visor sells for $17. Shadee’s beginning and ending finished goods inventories for May are 90 and 50 units, respectively. Ending finished goods inventory for June will be 60 units. It expects the following unit sales for the third quarter: July 500 August 460 September 450 Sixty percent of Shadee’s sales are cash. Of the credit sales, 52 percent is collected in the month of the sale, 38 percent is collected during the following month, and 10 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

Cash sales = 60%

Credit sales = 40%

Collection pattern for credit sales = 52% in the month of sale, 38% in the following month

Cash receipts for August = August cash sales + (August credit sales * 52%) + (July credit sales * 38%)

= (460 * 17 * 60%) + (460 * 17 * 40% * 52%) + (500 * 17 * 40% * 38%) = 7,610.56.

Cash receipts for September = September cash sales + (September credit sales * 52%) + (August credit sales * 38%)

= (450 * 17 * 60%) + (450 * 17 * 40% * 52%) + (460 * 17 * 40% * 38%) = 7,369.84.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.