Cash is 65 % of sales; remainder is on credit. Credit collections: 60 % month of sale, 30 % next, 10 % second. What are projected cash sales for the spring quarter?

Rationale

Projected cash sales for the spring quarter are $650,000.

To find the projected cash sales, we first need to determine total sales based on the cash percentage and the collections breakdown. Given that cash represents 65% of sales, the total sales can be calculated by taking the cash sales and dividing by 0.65, resulting in the total cash sales for the quarter.

A ($105,000) YOUR ANSWER

This figure represents a cash sales amount, but it is calculated incorrectly based on a misunderstanding of the cash percentage. If cash is 65% of total sales, $105,000 would imply total sales of approximately $161,538, which does not correspond to the projected cash sales for the spring quarter.

B ($195,000) YOUR ANSWER

While this amount might seem plausible, it also fails to account for the proper calculations regarding total sales. If $195,000 were cash sales, the total sales would be approximately $300,000, which does not align with the projected cash sales for the spring quarter when the proper percentages are applied.

C ($350,000) YOUR ANSWER

This option misrepresents the total cash generated based on sales. If $350,000 were cash sales, that would imply total sales of approximately $538,462. However, this does not reflect the proper calculation of cash sales for the spring quarter.

D ($650,000) CORRECT

This is the correct calculation of projected cash sales for the spring quarter. By determining that cash represents 65% of total sales, we can assess that total sales must then be $1,000,000, making cash sales equal to $650,000.

Conclusion

Correctly calculating projected cash sales involves understanding the relationship between cash sales and total sales based on given percentages. In this case, $650,000 represents the 65% cash sales of a total of $1,000,000 in sales for the spring quarter. The other options miscalculate the relationships and percentages involved, leading to incorrect projections.

Cash is 65 % of sales; remainder is on credit. Credit collections: 60 % month of sale, 30 % next, 10 % second. What are projected cash sales for the spring quarter?

Projected cash sales for the spring quarter are $650,000.

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