Question

Shadee Corp. expects to sell 630 sun visors in May and 370 in June. Each visor sells for $14. Shadee’s beginning and ending finished goods inventories for May are 80 and 40 units, respectively. Ending finished goods inventory for June will be 55 units. It expects the following unit sales for the third quarter: July 530 August 460 September 440 Sixty percent of Shadee’s sales are cash. Of the credit sales, 54 percent is collected in the month of the sale, 37 percent is collected during the following month, and 9 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.)

Answer 1

Total Cash Receipts for August and September are as follows:

Calculations of Sales and Amount to be received:

	Month	May	June	July	August	September
	Sales Units	630	370	530	460	440
	Sales Amount	8820	5180	7420	6440	6160
Cash	60%	5292	3108	4452	3864	3696
Same month	21.60%	1905.12	1118.88	1602.72	1391.04	1330.56
Next Month	14.80%	1305.36	766.64	1098.16	953.12	911.68
Never	3.60%	317.52	186.48	267.12	231.84	221.76

The Cash Percentage is already given, rest would be credit sales which will be 40%.

Out of 40%, 54% (i.e) 40*54%=21.60% will be received same month

Out of 40%, 37% (i.e) 40*37%=14.80% will be received during the following month

Out of 40%, 9% (i.e) 40*9%=3.60% will be never collected.

Cash Receipts for August and September will be as follows

1. Cash Receipt of July for 14.80% of credit sales made = 7420*14.80%=1098.16

2. Cash Receipt of August for 60% of cash sales made = 6440*60%=3864

3. Cash Receipt of August for 21.60% of Credit sales = 6440*21.60%=1391.04

4. Cash Receipt of August (received in Sep) for 14.80% of credit sales made = 6440*14.80%=953.12

5. Cash Receipt of September for 60% of cash sales made = 6160*60%=3696

6. Cash Receipt of September for 21.60% of Credit sales = 6160*21.60%=1330.56

So Sums it upto 1098.16+3864+1391.04+953.12+3696+1330.56=$12,333 (rounding upto nearest whole dollar)