Background

Budgeted sales: December $220,000

January $200,000

Collections of A/R: Collected in month of sale 60.00%

Collected following month 38.00% REMEMBER:

Est B/D expense 2.00%

Discount for early payment 1.00%

Gross margin % 25%

Target End Inv, as % of following month's sales 80.00%

Merchandise payments: % paid in month following month of purchase 100.00%

Other operating expenses (cash) = $22,600

Annual depreciation expense = $216,000

Kelly Company's statement of financial position at the close of business on November 30th follows:

KELLY COMPANY

Statement of Financial Position November 30, 2013

Assets Cash $22,000

Accounts receivable (net of $4,000 allowance for doubtful accounts)$76,000

Inventory $132,000

Property, plant, and equipment (net of $680,000 accumulated depreciation) $870,000

Total assets $1,100,000

Liabilities and Stockholders' Equity Accounts payable $162,000

Common stock $800,000

Retained earnings $138,000

Total liabilities and equity $1,100,000

Requirements

1. What is the total of budgeted cash collections for December?

2. How much is the book value of accounts receivable at the end of December?

3. How much is the income (loss) before income taxes for December?

4. What is the projected balance in inventory on December 31, 2013?

5. What are budgeted purchases for December?

6. What is the projected balance in accounts payable on December 31, 2013?

Please show work so that I can understand how the answers were computed.