KAB Incorporated, a small retail store, had the following results for May. The budgets for June and July are also given. Sales are collected 80% in the month of the sale and the balance in the month following the sale. (There are no bad debts.) The goods that are sold are purchased in the month prior to sale. Suppliers of the goods are paid in the month following the sale. The "selling and administrative expenses" are paid in the month of the sale.The amount of cash collected during June should be:

A) $32,000
B) $40,000
C) $40,400
D) $41,000

To determine the amount of cash collected during June, we need to add up the sales made in April and May (since sales are collected 80% in the month of sale and 20% in the following month) and subtract payments to suppliers and selling and administrative expenses for May (since these are paid in the month following the sale).

Cash collected in June = (April sales x 20%) + (May sales x 80%) - May payments to suppliers - May selling and administrative expenses

Cash collected in June = ($16,000 x 20%) + ($40,000 x 80%) - $20,000 - $4,400

Cash collected in June = $3,200 + $32,000 - $20,000 - $4,400

Cash collected in June = $10,800

Therefore, the best choice is C.