The Gomez Company, a Merchandising Firm, Has Budgeted Its Activity

The Gomez Company, a merchandising firm, has budgeted its activity for December according to the following information:

• Sales at $500,000, all for cash.
• Merchandise Inventory on November 30 was $250,000.
• The cash balance at December 1 was $20,000.
• Selling and administrative expenses are budgeted at $50,000 for December and are paid for in cash.
• Budgeted depreciation for December is $30,000.
• The planned merchandise inventory on December 31 is $260,000.
• The cost of goods sold represents 75% of the selling price.
• All purchases are paid for in cash.
-The budgeted net income for December is:

A) $75,000
B) $45,000
C) $125,000
D) $65,000