Noskey Corporation Is a Merchandising Firm Management Estimates That 5% of Credit Sales Are Uncollectible

Multiple Choice

Noskey Corporation is a merchandising firm. Information pertaining to the company's sales revenue is presented in the following table. $\begin{array}{lrr}&\text { June }&\text {July }&\text {August }\\&\text { (Actual) }&\text { (Budged) }&\text { (Budget) }\\ \text { Cash sales. } &£ 80,000& £ 100,000 &£ 60,000\\ \text { Credit sales. } &\underline{240,000} &\underline{360,000} &\underline{180,000}\\ \text {Total sales. } &\underline{£ 320,000 }&\underline{£ 460,000} &\underline{£ 240,000}\\\\\end{array}$

Management estimates that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale and the remainder in the month following the sale. Purchases of inventory are equal to next month's cost of goods sold. The cost of goods sold is 30% of the selling price. All purchases of inventory are on account; 25% are paid in the month of purchase, and the remainder is paid in the month following the purchase.
- Noskey Corporation's budgeted total cash payments in July for inventory purchases are

A) £405,000
B) £283,500
C) £240,000
D) £168,000