Question

Chadmark Corporation's budgeted monthly sales are $3,000. The company sells on credit with terms of 2/10 net 45. Forty (40) percent of Chadmark's customers pay on Day 10 and take the 2 percent discount; the remaining 60 percent pay in the month following the sale (on Day 45), so they pay the full invoice price. What is Chadmark's total cash receipts for a typical month? Group of answer choices

Answer 1

The Chadmark Corporation's total cash receipts for a typical month is $2,976.

Data and Calculations:

Budgeted monthly sales = $3,000

Credit terms = 2/10 net 45

Percentage that take discount = 40%

Sales with discount =$1,200 ($3,000 x 40%)

Cash receipts from the 40% customers = $1,176

Cash Discounts =$24

Sales without discount = $1,800 ($3,000 x (1 - 40%)

Total cash receipts = $2,976 ($1,800 + $1,176)

Thus, Chadmark's total cash receipts for typical month is $2,976.

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