Super Drive, a computer disk storage and back-up company, uses accrual accounting. The company's Statement of Financial Position for the year ended November 30, Year 1, is shown below. Super Drive
Statement of Financial Position
November 30, Year 1 | |
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| Assets | | | Cash | $ 52,000 | | Accounts receivable, net | 150,000 | | Inventory | 315,000 | | Property, plant, and equipment | 1,000,000 | | Total assets | $ 1,517,000 | | | | | Liabilites | | | Accounts payable | 175,000 | | Common stock | 900,000 | | Retained earnings | 442,000 | | Total liabilites and shareholders' equity | $ 1,517,000 | Additional information regarding Super Drive's operations includes the following: Sales are budgeted at $520,000 for December Year 1 and $500,000 for January Year 2. Collections are expected to be 60 percent in the month of sale and 40 percent in the month following the sale. Eighty percent of the disk drive components are purchased in the month prior to the month of sale, and 20 percent are purchased in the month of sale. Purchased components comprise 40 percent of the cost of goods sold. Payment for the components is made in the month following the purchase. Cost of goods sold is 80 percent of sales.
The projected gross profit for the month ending December 31, Year 1, is:
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a. | $134,000 | |
b. | $416,000 | |
c. | $104,000 | |
d. | $0 |
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