Question
Brownsville Novelty Store prepared the following budget information for the month of May: Sales are budgeted at $360,000. All sales are on account and a
Brownsville Novelty Store prepared the following budget information for the month of May: Sales are budgeted at $360,000. All sales are on account and a provision for bad debts is made for each month at three percent of sales for the month. Inventory was $84,000 on April 30; an inventory increase of $12,000 is planned for May 31. All inventory is marked to sell at cost plus 50 percent. Estimated cash disbursements for selling and administrative expenses for the month are $48,000. Depreciation for May is projected at $6,000. Brownsville's budgeted bad debts expense for May is: Multiple Choice $7,200. $5,400. $14,400. $10,800. $7,560.
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