The Atom Corporation, a merchandising firm, has budgeted its activity for Novemb

Question

The Atom Corporation, a merchandising firm, has budgeted its activity for November according to the following information:

• Sales at $554,000, all for cash.
• Merchandise inventory on October 31 was $283,000.
• The cash balance November 1 was $27,000.
• Selling and administrative expenses are budgeted at $71,700 for November and are paid for in cash.
• Budgeted depreciation for November is $29,300.
• The planned merchandise inventory on November 30 is $316,700.
• The cost of goods sold is 60% of the selling price.
• All purchases are paid for in cash.
• There is no interest expense or income tax expense.

The budgeted net income for November is:

$138,600

$120,600

$221,600

$149,900

Explanation / Answer

Option B is correct.

Note - It is assumed that it is not Cash budget.

Particular Amount $ Sales A 554000 COGS B 332400 Profit (A-B) 221600 Selling and Dist expense 71700 Depreciation 29300 Net income 120600

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