A firm has projected sales in May, June, and July of $100, $200, and $300, respectively. The firm makes 20 percent of sales for cash and collects the balance one month following the sale. The firm's total cash receipts in July

a. are $200.

b. are $220.

c. are $180.

d. cannot be determined with the information provided.

b. are $220.

Explanation:

Given that firm makes 20 percent of sales for cash and collects the balance one month following the sale. It means that cash collected in July will consist of 20% of the sales in the month of July and 80% of the sales in the previous month of June.

As such, if projected sales in May, June, and July of $100, $200, and $300, respectively, the firm's total cash receipts in July

= (20% * $300) + (80% * $200)

= $60 + $160

= $220

B) are $220.

Explanation:

Month total sales 20% cash balance collection total

May $100 $20 $0 $20

June $200 $40 $80 $120

July $300 $60 $160 $220

The firm will collect 20% of its July sales = $60, and 80% of its June sales = $160, for a total of $220