Quality Goods 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.

Quality Goods 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, Janelle Matthews. All merchandise is marked up to sell at its invoice cost plus 25 per cent. Stated differently, cost is 80 per cent of selling price. Merchandise inventories at the beginning of each month are 30 per cent of that month’s forecast cost of sales. 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
(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 $1450 000 380 000 $1 830 000 July $1 550 000 390 000 $1 940 000 August $1 650 000 400 000 $2 050 000