Ningbo shipping has projected sales in May, June, and July of $500, $600, and $700, respectively. It makes 20 percent of sales for cash and collects the balance one month following the sale. Ningbo Shipping's total cash receipts in July are
A) $620
B) $520
C) $680
D) $1,100

Question

Quizplus · Accepted Answer

Ningbo Shipping collects 20% of sales for cash and the balance one month following the sale. In July, it will collect 20% of July sales ($700 x 20% = $140) plus the balance of June sales ($600 x 80% = $480). Total cash receipts in July are $140 + $480 = $620.

Ningbo Shipping Has Projected Sales in May, June, and July