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 total sales during the month of May.

Question

Quizplus · Accepted Answer

Cash sales for May = $900,000 x 25% = $225,000Credit sales for May = $900,000 x 75% = $675,000Cash received from credit sales in May = $675,000 x 30% = $202,500Total cash received from sales in May = $225,000 + $202,500 = $427,500Cash received from April credit sales = $675,000 x 65% = $442,500Total cash received in May = $427,500 + $442,500 = $870,000

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