Question

E8-11 Calculating Cash Receipts [LO 8-4] Shadee Corp. expects to sell 650 sun visors in May and 420 in June. Each visor sells for $11. Shadee’s beginning and ending finished goods inventories for May are 85 and 55 units, respectively. Ending finished goods inventory for June will be 65 units. It expects the following unit sales for the third quarter: July 515 August 480 September 440 Sixty percent of Shadee’s sales are cash. Of the credit sales, 50 percent is collected in the month of the sale, 36 percent is collected during the following month, and 14 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.) rev: 04_01_2017_QC_CS-84728

Answer 1

• All working forms part of the answer
• Working

Working		July	August	September
A	Expected unit sales	515	480	440
B	Sale price per unit	$                11.00	$                11.00	$            11.00
C = A x B	Expected Sales	$          5,665.00	$          5,280.00	$      4,840.00
D = C x 60%	Cash Sales (60%)	$          3,399.00	$          3,168.00	$      2,904.00
E = C - D	Credit Sale	$          2,266.00	$          2,112.00	$      1,936.00
F = E x 50%	50% of credit sale	$          1,133.00	$          1,056.00	$          968.00
G = E x 36%	36% of credit sale	$              815.76	$              760.32	$          696.96

• Requirement: Shadee’s total cash receipts for August and September

	August	September	Totals
Cash collected from:
Cash Sales	$                3,168	$                2,904	$            6,072
Credit Sale of July	$                    816		$                816
Credit Sale of August	$                1,056	$                    760	$            1,816
Credit Sale of September		$                    968	$                968
Total Cash Collections	$                5,040	$                4,632	$            9,672