The Gingham Company's Budgeted Income Statement Reflects the Following Amounts

question 3

Multiple Choice

The Gingham Company's budgeted income statement reflects the following amounts: $$\begin{array} { l c c r } & \underline { \text { Sales } } & \underline { \text { Purchases } } & \underline { \text { Expenses } } \\\text { January } & \$ 120,000 & \$ 78,000 & \$ 24,000 \\\text { February } & 110,000 & 66,000 & 24,200 \\\text { March } & 125,000 & 81,250 & 27,000 \\\text { April } & 130,000 & 84,500 & 28,600\end{array}$$ Sales are collected 50% in the month of sale, 30% in the month following sale, and 19% in the second month following sale. One percent of sales is uncollectible and expensed at the end of the year.
Gingham pays for all purchases in the month following purchase and takes advantage of a 3% discount. The following balances are as of January 1: $$\begin{array} { l r } \text { Cash } & \$ 88,000 \\\text { Accounts receivable* } & 58,000 \\\text { Accounts payable } & 72,000\end{array}$$
*Of this balance, $35,000 will be collected in January and the remaining amount will be collected in February.
The monthly expense figures include $5,000 of depreciation. The expenses are paid in the month incurred.
Gingham's budgeted cash receipts in February are:

• A) $91,000.
• B) $95,000.
• C) $113,090.
• D) $113,640.
• E) $114,000.

---

Definitions:

Fatigue

A state of extreme tiredness or exhaustion, often resulting from mental or physical exertion or illness.

Open-Ended Questions

Questions designed to elicit more than a simple yes or no response, encouraging detailed answers.

White Coat Syndrome

A phenomenon where a patient's blood pressure measurements are higher when taken in a medical setting than in other settings, possibly due to anxiety.

Licensed Practitioner

A professional who has been officially allowed to provide certain services or conduct specific activities, typically in healthcare, after meeting the required qualifications.