Question

Shadee Corp. expects to sell 590 sun visors in May and 300 in June. Each visor sells for $16. Shadee’s beginning and ending finished goods inventories for May are 65 and 55 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	490
September	450

Sixty percent of Shadee’s sales are cash. Of the credit sales, 52 percent is collected in the month of the sale, 36 percent is collected during the following month, and 12 percent is never collected.

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

Answer 1

Solution

	August	September
Total cash Receipts	$             7,487	$            6,947

Working

	August	September
Cash sales	$             4,704	$            4,320
Collection from June sales
Collection from July sales	$             1,152
Collection from August sales	$             1,631	$            1,129
Collection from September sales		$            1,498
Total cash Receipts	$             7,487	$            6,947