The Adams Company, a merchandising firm, has budgeted its activity for November

Question

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

• Sales were at $450,000, all for cash.
• Merchandise inventory on October 31 was $200,000.
• The cash balance on November 1 was $18,000.
• Selling and administrative expenses are budgeted at $60,000 for November and are paid for in cash.
• Budgeted depreciation for November is $25,000.
• The planned merchandise inventory on November 30 is $230,000.
• The cost of goods sold is 70% of the selling price.
• All purchases are paid for in cash.



The budgeted net income for November is

A. $135,000.

B. $68,000.

C. $50,000.

D. $75,000.

Explanation / Answer

c.the net income $50000 sales $450000 Less:cost of goods sold70% on sales $315000 gross profit $135000 Less:selling and admn and depre- ciation $85000 Net income $50000

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