Shadee Corp. expects to sell 640 sun visors in May and 320 in June. Each visor s

Question

Shadee Corp. expects to sell 640 sun visors in May and 320 in June. Each visor sells for $19. Shadee’s beginning and ending finished goods inventories for May are 65 and 40 units, respectively. Ending finished goods inventory for June will be 65 units.

It expects the following unit sales for the third quarter:      

Sixty percent of Shadee’s sales are cash. Of the credit sales, 54 percent is collected in the month of the sale, 36 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.)

July 500 August 490 September 420

Explanation / Answer

Calculation of Shadee’s total cash receipts for August and September.

Collection in August , 36 % of credit sales of July

[ 500 units * $19 * 40 % * 36% ]

Collection in september , 36 % of credit sales of August

[ $3,724 * 36 % ]

Particular August September Total unit sold 490 units 420 units   * Selling price per unit $19 $19 Total Sales $9,310 $7,980 Total cash sales (60 %) ... A $5,586 $4,788 Total credit sales (40 %) $3,724 $3,192 Collection from Accounts receivable Collection in the month of sales (54 % of credit sales) $2,010.96 $1,723.68

Collection in August , 36 % of credit sales of July

[ 500 units * $19 * 40 % * 36% ]

$1,368

Collection in september , 36 % of credit sales of August

[ $3,724 * 36 % ]

$1,340.64 Total collection from Accounts receivable ... B $3,378.96 $3,064.32 Total Cash Receipts [ A+B ] ( Rounding to nearest whole dollar) $8,965 $7,852

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