Korn Inc, Projects Sales for Its First Three Months of Operation

question 58

Multiple Choice

Korn Inc., projects sales for its first three months of operation as follows: $\begin{array}{lccc}&\text { October}&\text { November }&\text { December }\\\text {Credit sales } & \$ 100,000 & \$ 150,000 & \$ 200,000 \\ \text { Cash sales } & 40,000 & 60,000 & 50,000 \\ \text { Tota } & \$ 140,000 & \$ 210,000 & \$250,000\\\end{array}$

Inventory on October 1 is $40,000. Subsequent beginning inventories should be 40% of that month's cost of goods sold. Goods are priced at 140% of their cost. 50% of purchases are paid for in the month of purchase; the balance is paid in the following month. It is expected that 50% of credit sales will be collected in the month following sale, 30% in the second month following the sale, and the balance the third month. A 5% discount is given if payment is received in the month following sale.
(Appendix 10A) What are the anticipated cash receipts for October?

• A) $-0-
• B) $40,000
• C) $47,500
• D) $66,500

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Definitions:

Optic Foramen

An opening in the skull through which the optic nerve passes from the eye to the brain.

Orbit

Eye socket; formed by seven skull bones that surround and protect the eye.

Optic Nerve

The cranial nerve responsible for transmitting visual information from the retina to the brain.

Optic Disc

The point on the retina at which the optic nerve fibers exit the eye, creating a blind spot as it contains no photoreceptors.