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Halifax Shoes has 30% of its sales in cash and the remainder on credit. Of the...

Halifax Shoes has 30% of its sales in cash and the remainder on credit. Of the credit sales, 65% is collected in the month of sale, 25% is collected the month after the sale, and 5% is collected the second month after the sale. How much cash will be collected in August if sales are estimated as $55,000 in June, $48,500 in July, and $81,000 in August?

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Answer #1

Answer: CAsh collections in August = $71568

Explanation:

Month Total Sales Cash Sales @30% Credit Sales 65% in month of Sale 25% in first month after sale 5% Second month after sale
June 55000 16500 38500 25025 9625 1925
July 48500 14550 33950 22068 8488 1698
August 81000 24300 56700 36855 14175 2835

Cash Collections in August = August Cash Sales + 65% cash collected from Aug Sales + 25% Cash collected from July Sales + 5% cash collecte from June Sales

Cash collections in August = $24300 + $36855 + $8488 +$1925 = $71568

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