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The following information pertains to the October operating budget for Flockhart Corporation. times Budgeted sales...

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Question

Accounting

The following information pertains to the October operating budget for Flockhart Corporation.

times

Budgeted sales for October $100,000 and November $200,000.

times

Collections for sales are 60% in the month of sale and 40% the next month.

times

Gross margin is 30% of sales.

times

Administrative costs are $10,000 each month.

times

Beginning accounts receivable (October 1) $20,000.

times

Beginning inventory (October 1) $14,000.

times

Beginning accounts payable (October 1) $60,000. (All from inventory purchases.)

times

Purchases are paid in full the following month.

times

Desired ending inventory is 20% of next month's cost of goods sold (COGS).

times

No loans are outstanding on October 1

At the end of October, budgeted ending inventory is:

A.

$40,000.

B.

$20,000.

C.

$28,000.

D.

None of the above is correct.

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