Sales are budgeted at $250,000 for November, $260,000 for December, and $260,000 for January.

Collections are expected to be 75% in the month of sale, 24% in the month following the sale, and 1% uncollectible.

The cost of goods sold is 80% of sales.

The company would like to maintain ending merchandise inventories equal to 70% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.

Other monthly expenses to be paid in cash are $21,000.

Monthly depreciation is $18,200.

Ignore taxes.

Balance Sheet October 31

Assets

Cash $48,000

Accounts receivable, net of allowance for uncollectible accounts 96,000

Merchandise inventory 140,000

Property, plant and equipment, net of $624,000

accumulated depreciation 1,270,000

Total assets $1,554,000

Liabilities and Stockholders' Equity

Accounts payable $336,750

Common stock 840,000

Retained earnings 377,250

Total liabilities and stockholders' equity $1,554,000

The cost of December merchandise purchases would be:

A)$208,000

B)$145,600

C)$48,000

D)$96,000