Question
1. Middlefield Company's budgeted income statement reflects the following amounts: Sales Purchases Expenses January $ 113,000 $ 71,000 $ 23,300 February 103,000 59,000 23,500 March
1. Middlefield Company's budgeted income statement reflects the following amounts: Sales Purchases Expenses January $ 113,000 $ 71,000 $ 23,300 February 103,000 59,000 23,500 March 118,000 74,250 26,300 April 123,000 77,500 27,900 Sales are collected 50% in the month of sale, 20% in the month following sale, and 29% in the second month following sale. One percent of sales is uncollectible and expensed at the end of the year. Middlefield pays for all purchases in the month following purchase and takes advantage of a 1% discount. The following balances are as of January 1: Cash $ 81,000 Accounts receivable* 51,000 Accounts payable 65,000 *Of this balance, $20,400 will be collected in January and the remaining amount will be collected in February. The monthly expense figures include $4,300 of depreciation. The expenses are paid in the month incurred. Morgan's expected cash balance at the end of January is:
a) $74,550 b) $81,400 c) $70,250 d) $85,700 e) $93,550
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