Question
2. Carver Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow: Sales
2. Carver Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow: Sales are budgeted at $350,000 for November, $320,000 for December, and $300,000 for January. Twenty percent of the sales each month are cash sales and the rest is on account (credit sales). Collections are expected to be 90% in the month of sale and 10% in the month following the sale. The cost of goods sold is 75% of sales. The company desires to have an ending merchandise inventory equal to 60% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase. Monthly SGA expenses to be paid in cash are $24,700. Monthly depreciation is $16,000. Ignore taxes. Balance Sheet October 31 Assets Cash $ 19,000 Accounts receivable 77,000 Inventory 157,500 Property, plant and equipment, net of $502,000 accumulated depreciation 1,002,000 Total assets $ 1,255,500 Liabilities and Stockholders' Equity Accounts payable $ 272,000 Common stock 780,000 Retained earnings 203,500 Total liabilities and stockholders' equity $ 1,255,500 - Required: a. Calculate the budgeted net operating income for November and December. b. Calculate the expected cash to be collected in November and December. c. Calculate the budgeted purchases for November. d. Calculate the budgeted cash balance as of December 31. e. Calculate the Accounts Receivable Balance as of December 31.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started