Holman Company pays each of its three salespeople a base salary of $1,000 per month plus a commission of 10 percent of their sales. The base salary is paid each month as incurred; the 10 percent commission is paid the month following the month of sale. The total sales for the past four months are as follows:
$\begin{array}{|l|l|}
\hline \text { June } & \$ 15,000 \
\hline \text { July } & 22,000 \
\hline \text { August } & 39,000 \
\hline \text { September } & 40,000 \
\hline
\end{array}$
Total salary and commission cash payments for September total

Question

Holman Company pays each of its three salespeople a base salary of $1,000 per month plus a commission of 10 percent of their sales. The base salary is paid each month as incurred; the 10 percent commission is paid the month following the month of sale. The total sales for the past four months are as follows: 
$\begin{array}{|l|l|}
\hline \text { June } & \$ 15,000 \
\hline \text { July } & 22,000 \
\hline \text { August } & 39,000 \
\hline \text { September } & 40,000 \
\hline
\end{array}$
 Total salary and commission cash payments for September total

Quizplus · Accepted Answer

First, we need to calculate the commission earned by each salesperson for the four months.

Salesperson 1: $20,000 x 0.10 = $2,000
Salesperson 2: $25,000 x 0.10 = $2,500
Salesperson 3: $15,000 x 0.10 = $1,500

Next, we need to calculate the total cash payments for each month.

May:
Base Salaries = $1,000 x 3 = $3,000
Commissions = $0
Total = $3,000

June:
Base Salaries = $1,000 x 3 = $3,000
Commissions = $2,000 + $2,500 + $1,500 = $6,000
Total = $9,000

July:
Base Salaries = $1,000 x 3 = $3,000
Commissions = $0
Total = $3,000

August:
Base Salaries = $1,000 x 3 = $3,000
Commissions = $0
Total = $3,000

Finally, we need to calculate the total salary and commission cash payments for September.

Total = $3,000 + $9,000 + $3,000 + $3,000 = $18,000

But we need to subtract the commissions that were earned in August but paid in September:

Total = $18,000 - $6,000 = $12,000

Therefore, the answer is C) $6,900.

Holman Company Pays Each of Its Three Salespeople a Base