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Memphis Company anticipates total sales for April, May, and June of $920,000, $1,020,000, and $1,070,000 respectively....

Memphis Company anticipates total sales for April, May, and June of $920,000, $1,020,000, and $1,070,000 respectively. Cash sales are normally 30% 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 total sales during the month of May.

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Answer #1

Please refer below notes

Total Sales = The amount mentioned in the problem

Cash Sales = Total sales value * 30%

Outstanding A value = Total sales - cash sales

65% collection = Outstanding *65%

Total Cash received in the month of May = $813220 (cash sales +65% collection)

APRIL MAY JUNE
TOTAL SALES $920,000 $1,020,000 $1,070,000
CASH SALES (30%) $276,000 $306,000 $321,000
OUTSTANDING $644,000 $714,000 $749,000
65% COLLECTION $418,600
CASH RECEIVED $724,600
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