CHAPTER 6 QUIZ
Dewitt Co. budgeted its activity for October 2004 from the following information:
Sales are budgeted at $750,000. All sales are credit sales and a provision for doubtful
accounts is made monthly at the rate of 2 percent of sales.
Merchandise inventory was $120,000 at September 30, 2004, and an increase of $10,000
is planned for the month.
All merchandise is marked up to sell at invoice cost plus 50 percent.(what is this sentence mean)
Estimated cash disbursements for selling and administrative expenses for the month are
Depreciation for the month is projected at $25,000.
Dewitt is projecting operating income for October 2004 in the amount of
Here is the original Solution( I am not sure if the answer is 100% right or not)
Cost of goods sold
(500,000) (750,000/Cost +.5 Cost) ——(I need a explanation about how you get this. What is the cost in this equation? )
Bad debts expense
S & A expense
and is this question correct?