The following information pertains to the October operating

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) 560,000. (All from inventory purchases.) Purchases are paid in full the foliowing 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 coliections are O A. $80.000 O B. $80,000 OC. $20 000 0 D. None of the above is correct.

Solution

Correct answer is option B.80,000

Calculation of Budgeted cash collection for October month

= 60% of October sales + 40% of September sales

40% of september sales is nothing but opening account receivable balance in October,ie $20,000

So answer = 1,00,000*60% +20,000

=$80,000