JT Department Store Expects to Generate the Following Sales for the Next

question 105

Multiple Choice

JT Department Store expects to generate the following sales for the next three months: JT's cost of gods sold is 60% of sales dollars. At the end of each month, JT wants a merchandise inventory balance equal to 20% of the following month's expected cost of goods sold. What dollar amount of merchandise inventory should JT plan to purchase in August?

• A)$257,400
• B)$314,600
• C)$352,800
• D)$327,800

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Definitions:

Compounded Monthly

A method where interest is calculated and added to the principal balance each month, leading to interest earning interest over time.

Annual Effective Rate

The interest rate on a loan or investment, adjusted for compounding over a one-year period.

Monthly

Occurring, produced, or done every month.

Semi-Annually Compounded

Interest calculation method where the interest is added to the principal on a half-yearly basis.