Fashion Jeans, Inc.sells two lines of jeans; Simple Life and Fancy Life.Simple Life sells for $85, and Fancy Life sells for $100.The company sells all of its jeans on credit and estimates that 60% is collected in the month of the sale, 35% is collected in the following month, and the rest is considered to be uncollectible.The estimated sales for Simple are: January, 20,000 jeans; February, 27,500 jeans; and March, 25,000 jeans.The estimated sales for Fancy are: January, 18,000 jeans; February, 19,000; and March, 20,500 jeans.What are the expected cash receipts for the month of March?

Question

Quizplus · Accepted Answer

To calculate the expected cash receipts for March, we need to consider the collections from sales made in March and the remaining collections from sales made in February. For March sales: Simple Life = 25,000 jeans * $85 * 60% = $1,275,000; Fancy Life = 20,500 jeans * $100 * 60% = $1,230,000. For February sales: Simple Life = 27,500 jeans * $85 * 35% = $816,875; Fancy Life = 19,000 jeans * $100 * 35% = $665,000. Total cash receipts for March = $1,275,000 + $1,230,000 + $816,875 + $665,000 = $3,988,125.