Leaverton's forecast of sales is as follows: July, $60,000; August, $90,000; September, $130,000. Sales are normally 80 percent cash and 20 percent credit in any month. Credit sales are collected in full in the following month. Merchandise cost averages 60 percent of sales price. The company desires an inventory as of September 30 of $52,000. The inventory as of June 30 was $25,000. Total cash receipts for August will be
A) $72,000.
B) $66,000.
C) $98,000.
D) $84,000.

Question

Quizplus · Accepted Answer

Total cash receipts for August include 80% of August's sales in cash ($90,000 * 0.8 = $72,000) and the collection of July's credit sales ($60,000 * 0.2 = $12,000), totaling $84,000.

Leaverton's Forecast of Sales Is as Follows: July, $60,000; August