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Suppose a Gap store has the following data:
• Accounts receivable, May 31: (.3 × May sales of $400,000) = $120,000
• Monthly forecasted sales: June, $400,000; July, $440,000; August, $500,000; September, $530,000
Sales consist of 70% cash and 30% credit. All credit accounts are collected in the month following the sales. Uncollectible accounts are negligible and may be ignored.

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