Question

E8-11 Calculating Cash Receipts [LO 8-4]

Shadee Corp. expects to sell 560 sun visors in May and 420 in June. Each visor sells for $16. Shadee’s beginning and ending finished goods inventories for May are 75 and 50 units, respectively. Ending finished goods inventory for June will be 65 units.

It expects the following unit sales for the third quarter:      

July	500
August	470
September	420

Sixty percent of Shadee’s sales are cash. Of the credit sales, 50 percent is collected in the month of the sale, 38 percent is collected during the following month, and 12 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

Answer 1

Answer

July credit sale = Total July Sale * 40%

July credit sale = (500 * $16) * 40%

July credit sale = $3,200

August Credit Sale = Total August Sale * 40%

August Credit Sale = $3,008 ($7520 * 40%)

Sept. Credit Sale = Total September Sale * 40%

Sept. Credit Sale = $2,688 ($6,720 * 40%)

	August	September
Sales	7,520.00	6,720.00
Cash Receipts
Cash Sale	4,512.00 ($7,520 * 60%)	4,032.00 ($6,720 * 60%)
Previous Months
Current Month	1,504.00 ($3,008 * 50%)	1,344.00 ($2,688 * 50%)
July	1,216.00 ($3,200 * 38%	-
August	-	1,143.04 ($3,008 * 38%)
Total Cash Receipts	7,232.00	6,519.04

Dear Student, if u have any doubt, plz feel free to reach me.