The following information pertains to the January operating budget for Ken’s Cor

ID: 2465343 • Letter: T

Question

The following information pertains to the January operating budget for Ken’s Corporation.

Budgeted sales for January $200,000 and February $100,000.

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 is $20,000.

Beginning inventory is $14,000.

Beginning accounts payable is $65,000. (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).

A) For January, budgeted cash collections are ________.

B) At the end of January, budgeted accounts receivable is ________.

C) For January, budgeted cost of goods sold is ________ .

A) Budgeted cash collection for January = 60% of current month sales = 60% * $200000 = $120000

B) Budgeted ending accounts receivables = Sales + Opening accounts receivable - Cash received

= $200000 + $20000 - $120000 = $100000

C) Cost of goods sold = Sales - Gross profit

= $200000 - 30%*$200000 = $140000

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.