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What is the projected cost of purchases for July? Select one: a. $306,000 b. None of these c. $78,000 d. $201,600 e. $261,600

What is the projected cost of purchases for July? Select one: a. $306,000 b. None of these c. $78,000 d. $201,600 e. $261,600

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Accounting Elite Store Ltd, a retail shop, projects sales for its first three months of operation as follows. July August September Credit $220,000 $245,000 $346,000 sales Cash $140,000 $ 80,000 $114,000 sales Total $360,000 $325,000 $460,000 sales Inventory on 1 July is $60,000. Subsequent beginning inventories should be 30% of that month's cost of goods sold. Goods are priced at 125% of their cost. 60% of purchases are paid for in the month of purchase; the balance is paid in the following month. It is expected that 50% of credit sales will be collected in the month following sale, 35% in the second month following the sale and the balance the third month. A 5% discount is given if payment is received in the month following sale. What is the projected cost of purchases for July? Select one: a. $306,000 b. None of these c. $78,000 d. $201,600 e. $261,600
Transcribed Image Text:Accounting Elite Store Ltd, a retail shop, projects sales for its first three months of operation as follows. July August September Credit $220,000 $245,000 $346,000 sales Cash $140,000 $ 80,000 $114,000 sales Total $360,000 $325,000 $460,000 sales Inventory on 1 July is $60,000. Subsequent beginning inventories should be 30% of that month's cost of goods sold. Goods are priced at 125% of their cost. 60% of purchases are paid for in the month of purchase; the balance is paid in the following month. It is expected that 50% of credit sales will be collected in the month following sale, 35% in the second month following the sale and the balance the third month. A 5% discount is given if payment is received in the month following sale. What is the projected cost of purchases for July? Select one: a. $306,000 b. None of these c. $78,000 d. $201,600 e. $261,600
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