$44$

P$7-3($Algo$)$ Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow LO$7-2,7-3$

$10$ points

References

At the end of January of the current year, the records of Donner Company showed the following for a particular item that sold at $$18\mathrm{.}00$ per unit:

$\backslash$table$[[$Transactions$,$Units,Amount$],[$Inventory$,$ January $1,550,$$$1,980$

KAB Incorporated, a small retail store, had the following results for May. The budgets for June and July are also given.

Sales are collected $80\%$ in the month of the sale and the balance in the month following the sale. $($There are no bad debts.$)$ The goods that are sold are purchased in the

month prior to sale. Suppliers of the goods are paid in the month following the sale. The "selling and administrative expenses" are paid in the month of the sale.

The amount of cash collected during June should be:

Multiple Choice

$$32,000$

$$40,000$

$$40,400$