Question

Memphis Company anticipates total sales for April, May, and June of $910,000, $1,010,000, and $1,060,000 respectively. Cash sales are normally 20% of total sales. Of the credit sales, 40% are collected in the same month as the sale, 55% 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.
A. $925,600.
B. $687,200.
C. $723,600.
D. $995,600.
E. $783,600.

Answer 1

Answer:

E. $783,600.

Explanation:

The computation of the amount of cash received from credit sales is shown below

Months Credit sales(80%)

April         728000

May       808000

June      848000

Now the amount of cash received is  

= ($848,000 × 0.4) + ($808,000 × 0.55)

= $783,600