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14) (Appendix 10A) Gold Company has the following balances at December 31, 20x0: Cash $6,000; accounts receivable $34,000 ($10,000 from November and $24,000 from December);
14) (Appendix 10A) Gold Company has the following balances at December 31, 20x0: Cash $6,000; accounts receivable $34,000 ($10,000 from November and $24,000 from December); merchandise inventory $40,000; and accounts payable $20,000 (for merchandise purchases only). Budgeted sales follow: January February March April $ 50,000 90,000 60,000 100,000 Other data: *Sales are 40% cash, 50% collected during the following month, and 10% collected during the second month after sale. A 3% cash discount is given on cash sales *Cost of goods sold is 40% of sales *Ending inventory must be 140% of the next month's cost of sales *Purchases are paid 70% in month of purchase and 30% in the following month *The selling and administrative cost function is: $6,000 + $0.2 x sales. This includes $1,000 for amortization *All costs are paid in the month incurred *Minimum cash balance requirement is $6,000 What is the budgeted cost of purchases for February? *a) $19,200 b) $30,400 c) $15,000 d) $52,800
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