Answer the Following Questions Using the Information Below:
Footscray Company

question 44

Multiple Choice

Answer the following questions using the information below:
Footscray Company has the following sales budget for the last six months of 2018:
$$\begin{array} { l r l r } \text { July } & \$ 100000 & \text { October } & \$ 90000 \\\text { August } & 80000 & \text { November } & 100000 \\\text { September } & 110000 & \text { December } & 94000\end{array}$$ Historically,the cash collection of sales has been as follows:
65% of sales collected in the month of sale
25% of sales collected in the month following the sale
8% of sales collected in the second month following the sale
2% of sales are uncollectible
-What is the ending balance of accounts receivable for September,assuming uncollectible balances are written off during the second month following the sale?

• A)$48 500
• B)$44 900
• C)$99 500
• D)$46 500

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Definitions:

Call Contract

An agreement giving the option buyer the right to buy a specified quantity of a security at a set price within a specific time frame.

Options Exercised

The act of implementing the right to buy (call option) or sell (put option) an underlying asset at a predetermined price before the option expires.

Horizontal Spread

An options strategy involving the purchase and sale of two options of the same type and expiration date but different strike prices.

Call

An option contract giving the owner the right, but not the obligation, to buy a specified amount of an underlying asset at a set price within a specified time.