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 purchases that must be made in order to meet sales and inventory requirements for the quarter amount to

Question

Quizplus · Accepted Answer

Explanation:Sales for the quarter are $60,000 + $90,000 + $130,000 = $280,000. Cash sales are 80% of sales, or $280,000 x 0.80 = $224,000. Credit sales are 20% of sales, or $280,000 x 0.20 = $56,000. Credit sales are collected in full in the following month, so the collections in September will be $56,000. The desired inventory as of September 30 is $52,000, and the inventory as of June 30 was $25,000. Therefore, the increase in inventory during the quarter will be $52,000 - $25,000 = $27,000. The cost of goods sold is 60% of sales, or $280,000 x 0.60 = $168,000. Therefore, the total purchases that must be made in order to meet sales and inventory requirements for the quarter are $224,000 + $56,000 + $27,000 + $168,000 = $475,000.

Leaverton's Forecast of Sales Is as Follows: July,$60,000; August,$90,000; September,$130,000