Handy Hardware is a retail hardware store. Information about the store's operations follows. November 20x1 sales

Question:

Handy Hardware is a retail hardware store. Information about the store's operations follows.
• November 20x1 sales amounted to $200,000.
• Sales are budgeted at $220,000 for December 20x1 and $200,000 for January 20x2.
• Collections are expected to be 60 percent in the month of sale and 38 percent in the month following the sale. Two percent of sales are expected to be uncollectible. Bad debts expense is recognized monthly.
• The store's gross margin is 25 percent of its sales revenue.
• A total of 80 percent of the merchandise for resale is purchased in the month prior to the month of sale, and 20 percent is purchased in the month of sale. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses paid in cash amount to $22,600.
• Annual depreciation is $216,000.
The company's as of November 30, 20x1, is as follows:
HANDY HARDWARE, INC.
Balance Sheet
November 30, 20x1
Assets
Cash .................................................................................................................... $ 22,000
Accounts receivable (net of $3,500 allowance for uncollectible accounts) ........ 76,000
Inventory ............................................................................................................. 140,000
Property, plant, and equipment (net of $590,000 accumulated depreciation) ..... 862,000
Total assets ........................................................................................................... $1,100,000
Liabilities and Stockholders' Equity
Accounts payable .................................................................................................. $ 162,000
Common stock ....................................................................................................... 795,000
Retained earnings .................................................................................................. 143,000
Total liabilities and stockholders' equity ............................................................. $1,100,000
Required:
Compute the following amounts.
1. The budgeted cash collections for December 20x1.
2. The budgeted income (loss) before income taxes for December 20x1.
3. The projected balance in on December 31, 20x1.
Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...