Morgan Company's budgeted income statement reflects the following amounts:Sales Purchases ExpensesJanuary $ 120,000 $ 78,000 $ 2
4,000 February 110,000 66,000 24,200 March 125,000 81,250 27,000 April 130,000 84,500 28,600 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.Morgan pays for all purchases in the month following purchase and takes advantage of a 3% discount. The following balances are as of January 1:Cash $ 88,000 Accounts receivable* 58,000 Accounts payable 72,000 *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.Morgan’s expected cash balance at the end of February is:a.$87,000.b.$89,160.c.$92,000.d.$94,160.e.$113,300.
