Memphis Company anticipates total sales for April, May, and June of $800,000, $900,000, and $950,000 respectively. Cash sales are normally 25% of total sales. Of the credit sales, 30% are collected in the same month as the sale, 65% are collected during the first month after the sale, and the remaining 5% are not collected.
-Compute the amount of cash received from credit sales during the month of May.

Question

Memphis Company anticipates total sales for April, May, and June of $800,000, $900,000, and $950,000 respectively. Cash sales are normally 25% of total sales. Of the credit sales, 30% are collected in the same month as the sale, 65% are collected during the first month after the sale, and the remaining 5% are not collected. 
-Compute the amount of cash received from credit sales during the month of May.

Quizplus · Accepted Answer

In May, cash received from credit sales includes 30% of May's credit sales and 65% of April's credit sales. May's credit sales are 75% of $900,000, and April's credit sales are 75% of $800,000. Calculate 30% of May's credit sales and 65% of April's credit sales, then sum them to find the total cash received from credit sales in May.

Memphis Company Anticipates Total Sales for April, May, and June