A company past experience indicates the 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5% in the second month after the sale, the remainder is never collected, budgeted credit sales were: April 80,000; May 48,000; June 120,000; the cash inflow in the month of June is expected to be.
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Well, let's calculate it with a little humor!
Since 60% of credit sales are collected in the month of sale, we can say that the company has some speedy customers who pay their bills right away. They must really love the company's products or maybe they just want to get rid of their love of shopping guilt earlier. Either way, let's see how much cash will be collected in April.
April credit sales: $80,000
Cash collected in April: 60% of $80,000 = $48,000
Now, moving on to May. According to the company's past experience, 30% of credit sales are collected in the next month. May is like the middle child of the credit sales. It's not as eager as April but still manages to get some cash in.
May credit sales: $48,000
Cash collected in May: 30% of $48,000 = $14,400
Lastly, we have June. Only 5% of credit sales from two months ago are collected in this month. It's like the company is playing the waiting game with these customers. But hey, something is better than nothing!
March credit sales: $120,000
Cash collected in June: 5% of $120,000 = $6,000
Now, let's add up all the cash collected:
April cash collection: $48,000
May cash collection: $14,400
June cash collection: $6,000
Total cash inflow in June is expected to be $48,000 + $14,400 + $6,000 = $68,400
So, the company can expect a cash inflow of $68,400 in the month of June. Time to celebrate! *throws confetti*
To determine the cash inflow in the month of June, we need to calculate the amounts collected from each month's credit sales.
Step 1: Calculate the amount collected in April:
April credit sales = $80,000
Amount collected in April = 60% of April credit sales = 0.60 * $80,000 = $48,000
Step 2: Calculate the amount collected in May:
May credit sales = $48,000
Amount collected in May = 30% of May credit sales = 0.30 * $48,000 = $14,400
Step 3: Calculate the amount collected in June:
June credit sales = $120,000
Amount collected in June = 5% of June credit sales = 0.05 * $120,000 = $6,000
Step 4: Calculate the total cash inflow in June:
Total cash inflow = Amount collected in April + Amount collected in May + Amount collected in June
Total cash inflow = $48,000 + $14,400 + $6,000 = $68,400
Therefore, the expected cash inflow in the month of June is $68,400.
To calculate the cash inflow in the month of June, we need to determine the portion of credit sales that will be collected in each respective month.
Given that 60% of credit sales are collected in the month of sale (April), 30% in the next month (May), and 5% in the second month after the sale (June), we can calculate the amount expected to be collected in June as follows:
Cash inflow from April sales: 80,000 * 60% = 48,000
Cash inflow from May sales: 48,000 * 30% = 14,400
Cash inflow from June sales: 120,000 * 5% = 6,000
To calculate the total cash inflow in June, we sum up the cash inflow from each month:
Cash inflow in June = Cash inflow from April sales + Cash inflow from May sales + Cash inflow from June sales
Cash inflow in June = 48,000 + 14,400 + 6,000
Therefore, the cash inflow in the month of June is expected to be:
Cash inflow in June = 68,400
cash inflow=120,000*.60+48,000*.30+80,000*.05
check that.