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

question 102

Multiple Choice

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 cash receipts for August will be

• A) $72,000.
• B) $66,000.
• C) $98,000.
• D) $84,000.

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Definitions:

Operating Lease

A contract in which the ownership of the asset remains with the lessor while the lessee has the right to use the asset, without the option to purchase, for a certain period.

Operating Leases

Leases for which the lessee uses an asset for a shorter period than its useful life, and the lessor retains ownership of the asset.

Tax Purposes

The intentions or objectives related to compliance with tax laws and regulations, including the reporting of income, expenses, and other relevant financial information.

Gross Investment

The total amount invested in a particular asset or project before deducting any depreciation or amortization.