Memphis Company anticipates total sales for April, May, and June of $970,000, $1,070,000, and $1,120,000 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 May.
Multiple Choice
$730,400.
$829,200.
$983,200.
$769,200.
$1,053,200.
Amount of cash received from credit sales during the month of May have the following components:
1. 40% of credit sales of May collected in the same month
2. 55% of credit sales of April collected in May
Credit sales of April = $970,000 x 0.8 = $776,000
Credit sales of May = $1,070,000 x 0.8 = $856,000
Total cash received from credit sales during the month of May = 40% of $856,000 + 55% of $776,000
= $769,200
4th Option
Memphis Company anticipates total sales for April, May, and June of $970,000, $1,070,000, and $1,120,000 respectively....
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