Kent 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 for June.

Question

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For June, credit sales are 75% of $950,000, which is $712,500. Collections from June credit sales are 30% of $712,500, which is $213,750. Additionally, 65% of May's credit sales ($675,000) are collected in June, which is $438,750. Total cash received from credit sales in June is $213,750 + $438,750 = $652,500.

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