The Zeal Company operates antique and second-hand goods stores throughout Victoria. Such stores are currently very popular and sales are increasing each month. It has budgeted the following sales for the indicated months.

Zeal Company’s success in this specialty market is due in large part to the extension of credit terms and the budgeting techniques implemented by the firm’s owner, Barbara Zeal. All merchandise is marked up to sell at its invoice cost plus 25 percent. Stated differently, cost is 80 per cent of selling price. Merchandise inventories at the beginning of each month are 30 percent of that month’s forecasted cost of sales. With respect to sales on account, 40 percent of receivables are collected in the month of sale, 50 percent are collected in the month following, and 10 percent are never collected.

Required
a. What is the anticipated cost of sales for June?
b. What is the beginning inventory for July expected to be?
c. What are the July purchases expected to be?
d. What are the forecasted July cash collections?

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Sales on account Cash sales Total sales June $2730 000 523 000 $3 253 000 July $2830 000 533 000 $3363000 August $2930 000 543 000 $3473 000