Description
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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