39. 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?
Answer: D
Projected cash sales for the spring quarter are $650,000.
To determine the projected cash sales for the spring quarter, we calculate the total sales and then find 65% of that amount, as cash sales represent this percentage of total sales.
A) $105,000
This option is incorrect because $105,000 represents only a small fraction of the total sales required to meet the cash sales percentage. Given the context of cash being 65% of total sales, this figure does not align with the necessary calculations to reach the correct answer.
B) $195,000
Option B is incorrect as well because $195,000 still falls short of the necessary total sales figure. When applying the 65% cash sales ratio, this amount does not cover the projected cash sales needed for the spring quarter.
C) $350,000
While $350,000 is a significant figure, it does not meet the requirements for cash sales as it only represents a portion of what would be needed to achieve the correct cash sales figure. This option is not consistent with the calculations based on the provided cash-to-sales ratio.
D) $650,000
This option is correct because it accurately reflects the total sales needed to achieve $650,000 in cash sales for the spring quarter, based on the 65% cash sales ratio. This amount aligns with the calculations derived from the problem statement.
Conclusion
The correct answer of $650,000 is definitive as it directly corresponds to the cash sales percentage outlined in the question. All other options fail to meet the necessary calculations for projected cash sales, demonstrating their inconsistency with the cash-to-sales ratio provided.