Shadee Corp. expects to sell 600 sun visors in May and 440 in June. Each visor s

Question

Shadee Corp. expects to sell 600 sun visors in May and 440 in June. Each visor sells for $17. Shadee's beginning and ending finished goods inventories for May are 70 and 55 units, respectively. Ending finished goods inventory for June will be 50 units. It expects the following unit sales for the third quarter: July August September 560 480 470 Sixty percent of Shadee's sales are cash. Of the credit sales, 54 percent is collected in the month of the sale, 38 percent is collected during the following month, and 8 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.) August September Total Cash Receipts

Explanation / Answer

Shadee Corp

Determination of total cash receipts for August and September:

August

September

Total cash receipts

$8,106

$7,732

August

September

60% sales are cash sales

$4,896

$4,794

54% of credit sales in the month of sale

$1,763

$1,726

38% collected during next month of sales

$1,447

$1,240

Total cash collections

$8,106

$7,760

Explanation and workings –

July

August

September

units

560

480

470

sales at $17 per unit

$9,520

$8,160

$7,990

Cash sales 60%

$5,712

$4,896

$4,794

Credit sales

$3,808

$3,264

$3,196

54% of credit sales collection in current month

$2,056

$1,763

$1,726

38% of credit sales in next month

$1,447

$1,240

$1,214

Workings –

Total sales for August, $17 x 480 = $8,160

Cash sales = 60% of $8,160 = $4,896

Credit sales = 40% of $8,160 = $3,264

54% of credit sales collected in the month of sales,

= 54% of $3,264 = $1,763

38% of credit sales collected during the following month –

So, 38% of July credit sales are collected in August.

July sales = $17 x 560 = $9,520

Credit sales = 40% of 9,520 = $3,808

38% of credit sales collected in August = 3,808 x 38% = $1,447

38% of August credit sales collected in September

August credit sales = $3,264

38% collected in September = $3,264 x 38% = $1,240

August

September

Total cash receipts

$8,106

$7,732

August

September

60% sales are cash sales

$4,896

$4,794

54% of credit sales in the month of sale

$1,763

$1,726

38% collected during next month of sales

$1,447

$1,240

Total cash collections

$8,106

$7,760

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

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