BusyBody Company expects its November sales to be 20% higher than its October sales of $180,000. Purchases were $110,000 in October and are expected to be $160,000 in November. All sales are on credit and are collected as follows: 35% in the month of the sale and 60% in the following month. Purchases are paid 40% in the month of purchase and 60% in the following month. The cash balance on November 1 is $13,500. The cash balance on November 30 will be?

A. $4,100.

B. $53,600.

C. $67,100.

D. $40,100.

The correct answer is C.

Explanation:

Giving the following information:

BusyBody Company expects its November sales to be 20% higher than its October sales of $180,000. Purchases were $110,000 in October and are expected to be $160,000 in November.

All sales are on credit and are collected as follows: 35% in the month of the sale and 60% in the following month. Purchases are paid 40% in the month of purchase and 60% in the following month. The cash balance on November 1 is $13,500.

Sales November = 180,000*1.20 = 216,000

Purchases = 160,000

Cash balance:

Sales = 216,000*0.35 = 75,600

Sales From October = (180,000*0.6) = 108,000

Cash balance from October = 13,500

Purchases = (160,000*0.4) = (64,000)

Purchases from October = (110,000*0.6) = (66,000)

Total = 67,100