Use the following information for questions 15, 16, and 17: Leaverton\'s forecas

Question

Use the following information for questions 15, 16, and 17: Leaverton's forecast of sales is as follows: July $60,000 August 590,000 September $130,000 Sales arc normally 80% cash and 20% credit in any month. Credit sales are collected in full in the following month. Merchandise cost averages 60% of sales price. The company desires an inventory as of September 30^th of S52.000. The inventory as of June 30^th was $25,000. the July 31^st balance of accounts receivable will be $12,000 $18,000 $0 $48,000 Total purchases that must be made in order to meet sales and inventory requirements for the quarter amount to $141,000 $195,000 $307,000 $253,000

Explanation / Answer

15) The correct choice is A

Explanation : - July sales = $ 60,000, 80% are cash sales and 20% are credit sales.

20% of $ 60,000 = 0.2 X $ 60,000

Accounts receivable for the month of July = $ 12,000

16) The correct choice is C

Explanation : - Beginning inventoty = $ 25,000

Inventory requirement for the month of July , August & September= $ 60,000 + $ 90,000 + $ 130,000 - beginning inventory

Inventory requirement for the month of July , August & September= $ 280,000 - Beginning inventory

Inventory requirement for the month of July , August & September= $ 255,000

Ending inventory as of september 30th = $ 52,000

Total purchases that must be made to meet the sales and inventory requirement=$ 255,000 + $ 52,000

Total purchases = $ 307,000

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