Shadee Corp. expects to sell 600 sun visors in May and 800 in June. Each visor s

Question

Shadee Corp. expects to sell 600 sun visors in May and 800 in June. Each visor sells for $18. Shadee’s beginning and ending finished goods inventories for May are 75 and 50 units, respectively. Ending finished goods inventory for June will be 60 units.

It expects the following unit sales for the third quarter:

          
Sixty percent of Shadee’s sales are cash. Of the credit sales, 50 percent is collected in the month of the sale, 45 percent is collected during the following month, and 5 percent is never collected.        

Required:
Calculate Shadee’s total cash receipts for August and September.

July 625 August 490 September 450

Explanation / Answer

SOLUTION

AUGUST ($) SEPTEMBER ($) Cash Sales (490 * $18 *60%) , (450 * $18 *60%) 5,292 4,860 Credit sales- July sales (625 * $18 *40% *45%) 2,025 August Sales (490 * $18 * 40% * 50%) , (490 * $18 * 40% * 45%) 1,764 1,588 September sales (450 * $18 * 40% * 50%) 1,620 Total cash receipts 9,081 8,068

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