Assume the following budgeted information for a merchandising company: Budgeted sales (all on credit) for November, December,
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Question:
Assume the following budgeted information for a merchandising company:
- Budgeted sales (all on credit) for November, December, and January are $257,000, $227,000, and $218,000, respectively.
- Cash collections related to credit sales are expected to be 75%in the month of sale, 25% in the month following the sale.
- The cost of goods sold is 70% of sales.
- Each month’s ending inventory equals 15% of next month’s cost of goods sold.
- 40% of each month’s merchandise purchases are paid in the current month and the remainder is paid in the following month.
- Monthly selling and administrative expenses that are paid in cash in the month incurred total $29,500.
- Monthly depreciation expense is $13,500.
The budgeted net operating income for December would be:
A) 29099
B) 38600
C) 42599
D) 25100
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