Determining Total Sales from Credit and Cash Components

Steps:

• Cash sales are 10% of total sales, so credit sales are 90% of total sales.
• Total sales = credit sales ÷ 0.9 = $36,000 ÷ 0.9 =$40,000.
• Net profit margin is 30% of total sales.
• Net profit = 0.3 × $40,000 =$12,000.

Why D is correct:

• Net profit equals 30% of total sales ($40,000), per the profit margin formula.

Why the others are wrong:

• A: Applies 30% to $32,400 (underestimates total sales).
• B: Applies 30% to $33,333 (ignores cash sales proportion).
• C: Applies 30% to $39,600 (slight miscalculation of total sales).

Final answer: D