The following information pertains to the October operating budget for Flockhart

Question

The following information pertains to the October operating budget for Flockhart Corporation. Budgeted sales for October $100,000 and November $200,000 Collections for sales are 60% in the month of sale and 40% the next month. * Gross margin is 30% of sales. Administrative costs are $10,000 each month . Beginning accounts receivable (October 1) $20,000. Beginning inventory (October 1) $14,000. . Beginning accounts payable (October 1) $60,000. (All from inventory purchases.) . Purchases are paid in full the following month Desired ending inventory is 20% of next month's cost of goods sold (COGS). . No loans are outstanding on October 1 For October, budgeted cash collections are O A. $60.000 B. $80,000 OC. $20,000 O D. None of the above is correct

Explanation / Answer

B.$80,000.

october ($100,000 * 60% collected in october) $60,000 add; beginning accounts receivable to be collected this month $20,000 total cash collections in october $80,000

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