Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:
• Sales are budgeted at $240,000 for November, $220,000 for December, and $230,000 for January.• Collections are expected to be 61% in the month of sale, 35% in the month following the sale, and 4% uncollectible.
• The cost of goods sold is 70% of sales.
• The company desires to have an ending merchandise inventory at the end of each month equal to 50% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $23,500.
• Monthly depreciation is $14,500.
• Ignore taxes.
_________________________Statement of Financial Position
________________________________October 31
Assets
Cash.............................................................................................$18,000
Accounts receivable (net of allowance for uncollectible accounts)......................76,000
Merchandise inventory.........................................................................84,000
Property, plant and equipment (net of $50 accumulated depreciation)................958,000
Total assets.................................................................................$1,136,000
Liberties and Stockholder Eqi
Account payable.............................................................................$126,000
Common stock....................................................................................860,000
Retained earnings.............................................................................150,000
Total liabilities and stockholder equity....................................................$1,136,000
Accounts payable at the end of December would be:
$157,500
$154,000
$80,500
$77,000