$1.[$AICPA Adapted$]$ Dewitt Co$.$ budgeted its activity for October $2020$ from the following information:

$$ Sales are budgeted at $$750,000.$ All sales are credit sales and a provision for doubtful accounts is made monthly at the rate of $2\%$ of sales.

$$ Merchandise inventory was $$120,000$ at September $30,2004,$ and an increase of $$10,000$ is planned for the month.

$$ Merchandise purchases are expected to be $$497,500$ during the month.

$$ Estimated cash disbursements for selling and administrative expenses for the month are $$105,000.$

$$ Depreciation for the month is projected at $$25,000.$

Dewitt is projecting operating income for October $20204$ in the amount of a$.$ $$105,000.$ b$.$ $$117,500.$ c$.$ $$129,000.$ d$.$ $$97,500.$