Figure 8-5 The following forecasted sales pertain to Cordon Corporation:
Collection pattern:
65 percent in month of sale
35 percent in month following sale
Cordon Corporation has a selling price of $2.50 per unit and expects to maintain ending inventories equal to 25 percent of the next month's sales.
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Refer to Figure 8-5.How many dollars are expected to be collected in September?
A) $7,000
B) $40,000
C) $33,000
D) $21,000

Question

Figure 8-5 The following forecasted sales pertain to Cordon Corporation:
 Collection pattern:
65 percent in month of sale
35 percent in month following sale
 Cordon Corporation has a selling price of $2.50 per unit and expects to maintain ending inventories equal to 25 percent of the next month's sales.
-
Refer to Figure 8-5.How many dollars are expected to be collected in September?
A) $7,000 
B) $40,000 
C) $33,000 
D) $21,000

Quizplus · Accepted Answer

To calculate the expected sales for September, we need to first calculate the total sales for August (since 65% of August sales will be collected in September).

Total sales for August = $40,000 ÷ 0.65 = $61,538.46

Next, we need to calculate the expected ending inventory for September:

Expected ending inventory for September = 25% x ($33,000 x 0.35) = $2,887.50

Finally, we can calculate the expected sales for September by multiplying the expected sales for August by the collection rate:

Expected sales for September = $61,538.46 x 0.65 = $40,000

Therefore, the answer is C) $33,000 (the amount of sales expected to be collected in September).

Figure 8-5 the Following Forecasted Sales Pertain to Cordon Corporation