Solved Question: The cash sales and credit sales projected for sarahs kitchen are as follows

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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:

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

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