Question

the cash sales and credit sales projected for sarahs kitchen are as follows:

January february march april may

cash 17,000 19640 16200 15380 17390

credit 40,000 42000 48000 50000 49500

if collections of credit sales are 70% the first month and 30% the second month, what would be the cash receipts for march, april, and may

Answer 1

	January	February	March	April	May
Cash sales	$    17,000	$            19,640	$       16,200	$     15,380	$    17,390
Credit sales	$    40,000	$            42,000	$       48,000	$     50,000	$    49,500
Cash collected 70%	-	$            28,000	$       29,400	$     33,600	$    35,000
Cash collected 30%			$       12,000	$     12,600	$    14,400
Total Cash Collected			$       57,600	$     61,580	$    66,790

Cash receipt for March = Cash sales on March + 70 % credit sales of February + 30% credit sales of January

                                    = $ 16,200 + (0.7 x $ 42,000) + (0.3 x 40,000)

                 = $ 16,200 + $ 29,400 + $ 12,000 = $ 57,600

Cash receipt for April = Cash sales on April + 70 % credit sales of March + 30% credit sales of February

= $ 15,380 + (0.7 x $ 48,000) + (0.3 x 42,000)

                                  = $ 15,380 + $ 33,600 + $ 12,600 = $ 61,580

Cash receipt for May = Cash sales on May + 70 % credit sales of April + 30% credit sales of March

                                      = $ 17,390 + (0.7 x $ 50,000) + (0.3 x 48,000)

                                      = $ 17,390 + $ 35,000 + $ 14,400 = $ 66,790