The following information pertains to the October operating budget for Flockhart Corporation.

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Budgeted sales for October $100,000 and November $200,000.

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Collections for sales are 60% in the month of sale and 40% the next month.

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Gross margin is 30% of sales.

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Administrative costs are $10,000 each month.

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Beginning accounts receivable (October 1) $20,000.

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Beginning inventory (October 1) $14,000.

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Beginning accounts payable (October 1) $60,000. (All from inventory purchases.)

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Purchases are paid in full the following month.

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Desired ending inventory is 20% of next month's cost of goods sold (COGS).

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No loans are outstanding on October 1

For October, budgeted net income is:

A.

$20,000.

B.

$30,000.

C.

$40,000.

D.

None of the above is correct.