question archive A firm has projected sales in May, June, and July of $100, $200, and $400, respectively
A firm has projected sales in May, June, and July of $100, $200, and $400, respectively
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A firm has projected sales in May, June, and July of $100, $200, and $400, respectively. The firm makes 20 percent of sales for cash and collects the balance one month following the sale. The firm's total cash receipts in July is ________.
A
$220
B
$240
C
$260
D
$280
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Answer is B: $ 240
Projected sales in
May = $100
June = $200
July = $400
20% of sales of the month are cash sales.
Therefore, credit sales during the month = (100-20) % = 80%
The credit sales are received during the next month.
Cash sales during the month
May = $100 * 20 /100 = $ 20
June = $200 * 20 /100 = $ 40
July = $400 * 20 /100 = $ 80
Credit sales during the month
May = $100 * 80 /100 = $ 80
June = $200 * 80 /100 = $ 160
July = $400 * 80 /100 = $ 320
Total cash receipt during the month of July = cash sales of July + credit sales of June = $80 + $160 = $240.
