The Zel Company operates at local flea markets. It has budgeted the following sales for the indicated months.

Zels success in this speciality market is due in large part to the extension of credit terms and the budgeting techniques implemented by the entitys owner, Barbara Zel. Ms. Zel is a recycler; that is, she collects her merchandise daily at neighbourhood garage sales and sells the merchandise weekly at regional flea markets. All merchandise is marked up to sell at its invoice cost (as purchased at garage sales) plus 25 per cent. Stated differently, the cost is 80 per cent of the selling price. Merchandise inventories at the beginning of each month are 30 per cent of that months forecasted cost of goods sold. With respect to sales on account, 40 per cent of receivables are collected in the month of sale, 50 per cent are collected in the month following, and 10 per cent are never collected.

Required

1. What is the anticipated cost of goods sold for June? (5 marks)
2. What is the beginning inventory for July expected to be? (5 marks)
3. What are the July purchases expected to be? (5 marks)

What are the forecasted July cash collections?

\begin{tabular}{lrrr} & June & July & August \\ Sales on account & $1500000 & $1600000 & $1700000 \\ Cash sales & 200000 & 210000 & 220000 \\ Total sales & $1700000 & $1810000 & $1920000 \\ \hline \end{tabular}