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 pairs of jeans; February,27,500 pairs of jeans; and March,25,000 pairs of jeans.The estimated sales for Fancy are: January,18,000 pairs of jeans; February,19,000 pairs of jeans; and March,20,500 pairs of 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, February, and January. For March sales, 60% is collected in the same month. For February sales, 35% is collected in March. The uncollectible amount is not relevant for cash receipts calculation.**March Collections from March Sales:**- Simple Life: 25,000 pairs * $85 * 60% = $1,275,000- Fancy Life: 20,500 pairs * $100 * 60% = $1,230,000**March Collections from February Sales:**- Simple Life: 27,500 pairs * $85 * 35% = $817,187.50- Fancy Life: 19,000 pairs * $100 * 35% = $665,000**Total Expected Cash Receipts for March:**- $1,275,000 (Simple Life, March) + $1,230,000 (Fancy Life, March) + $817,187.50 (Simple Life, February) + $665,000 (Fancy Life, February) = $3,987,187.50Rounding to the nearest whole number, the expected cash receipts for March are approximately $3,988,125.