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 June.

Question

Quizplus · Accepted Answer

For June, the total sales are $950,000. Since cash sales are 25% of total sales, credit sales are 75% of total sales. Therefore, credit sales for June = 75% of $950,000 = $712,500. The cash collected from credit sales during June includes 30% of June's credit sales, plus 65% of May's credit sales. May's total sales are $900,000, so May's credit sales = 75% of $900,000 = $675,000. Therefore, cash received from credit sales in June = (30% of $712,500) + (65% of $675,000) = $213,750 + $438,750 = $652,500.

Memphis Company Anticipates Total Sales for April,May,and June of $800,000,$900,000,and