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ANSWERS-04OC101508-1 - 04OC101508 ACC 310F Foundations of...

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04OC101508 ACC 310F: Foundations of Accounting Homework #3 Stick-it! Incorporated buys USB flash drives used for data storage and then resells them to local area schools. Each unit is purchased for $13 and then resold for $20. The company had the following sales data available in units: June 800 (actual), July 1,250 (actual), August 1,900 (budget), September 875 (budget), October 650 (budget) and November 700 (budget). The company expects to lower the price to $18 for the month of October only for a special sales promotion. All sales are made on account and experience shows that 40% of sales are collected in the month of the sale, 35% in the month after the sale, 20% in the second month after the sale and the remaining 5% proves to be uncollectible. All product purchases are paid in full in the month the purchase is made. The company maintains ending inventory equal to 20% of the next month’s unit sales and the June and July actual inventory levels are consistent with this policy.
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