Reference no: EM132547426

Korn, Inc., projects sales for its first three months of operation as follows:

                            October,             November,                    December

Credit sales            $100,000,                $150,000,                $200,000

Cash sales                 40,000.                  60,000.                    50,000

Total Sales                $140,000,                 $210,000,               $250,000

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.

Question 1: What is the projected cost of purchases for October?

Group of answer choices

Option 1: $80,000

Option 1: $120,000

Option 1: $180,000

Option 1: $93,333