Marta\'s Shop sells India, silverware and kitchenware. A popular service is the

Question

Marta's Shop sells India, silverware and kitchenware. A popular service is the wedding registry service, which includes free gift wrapping and delivery of gifts to local brides. Marta accepts cash, cheques and credit cards (Visa, MasterCard and American Express). These payment methods have the following characteristics:

Cash - Payment is immediate; no fee is charged.

Cheque - Payment is immediate. The average amount per cheque from a customer is $37.50. The bank charges $0.25 service charge per cheque. A total of 1% of cheque revenue is from "bad" cheques that Marta cannot collect.

Visa/MasterCard - Marta accumulates the credit card receipts throughout the month and submits them in one bundle for payment on the last day of the month. The money is credited to Marta's account by the 5th day of the following month. A fee of 1.5% is charged by the credit card company.

American Express - Marta accumulates the receipts throughout the month and sends them for payment on the last day of the month. American Express credits Marta's account by the 6th day of the following month. A fee of 3.5% is charged by American Express.

Payment methods as a % of sales are broken down as follows:

American Express: 20% of sales

VISA / MasterCard: 50% of sales

Cheque: 5% of sales

Cash: 25% of sales

Required: Marta estimates sales of $30,000 in April and $60,000 in May. Complete the following Schedule of Cash Receipts for May and compute the shop's net cash receipts for May.

Schedule of Cash Receipts for May From May sales: Cash sales 17 S Cheques Less: bad cheques Less: service charge for cheques 18. S 19. 20. 2,950 From April sales: 21 S Less: Visa/Mastercard credit card fees 22. S 23. S 24 S Visa/Mastercard $14,775 American Express (Amex) Less: Amex fees 5.790 Total cash receipts for May 25. Note: means subtotal of blanks 18, 19 and 20 * means subtotal from blanks 21 and 22. means subtotal from blanks 23 and 24.

Explanation / Answer

Less: Service Charge for Cheques

[($ 3000 / $ 37.50) *0.25]

Less: Visa / Mastercard Credit card Fees

($ 15,000*1.5 / 100)

Schedule of Cash Receipts for May Amount (In $) Amount (In $) From May sales Cash Sales ($ 60,000 * 25 / 100) $ 15,000 Cheques ($ 60,000 * 5 / 100) $ 3,000 Less : Bad Cheques ($ 3,000 * 1/100) ($ 30)

Less: Service Charge for Cheques

[($ 3000 / $ 37.50) *0.25]

($ 20) $ 2,950 For April Sales Visa / Mastercard ($ 30,000 * 50 / 100) $ 15,000

Less: Visa / Mastercard Credit card Fees

($ 15,000*1.5 / 100)

($ 225) $ 14,775 American Express (Amex) ( $ 30,000 * 20 /100) $ 6,000 Less: Amex Fess ($ 6,000 * 3.5 / 100) ($ 210) $ 5,790 Total cash receipts for may $ 38,515

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