Question
KAB Inc., a small retail store, had the following results for May. The budgets for June and July are also given. May (actual)June (budget)July (budget)
KAB Inc., a small retail store, had the following results for May. The budgets for June and July are also given.
May
(actual)June
(budget)July
(budget)Sales$42,000$40,000$45,000Cost of sales21,00020,00022,500Gross margin21,00020,00022,500Operating expenses20,00020,00020,000Operating income$1,000$0$2,500
Sales are collected 80% in the month of the sale and the balance in the month following the sale. (There are no bad debts.) The goods that are sold are purchased in the month prior to sale. Suppliers of the goods are paid in the month following the sale. The "operating expenses" are paid in the month of the sale.
The amount of cash collected during the month of June should be:
$32,000.
$40,400.
$40,000.
$41,000.
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