Question
Carter Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow: o Sales
Carter Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow: o Sales are budgeted at $346,000 for November, $356,000 for December, and $366,000 for January. o Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible. o The cost of goods sold is 70% of sales. o The company desires to have an ending merchandise inventory equal to 80% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase. o Other monthly expenses to be paid in cash are $33,450. o Monthly depreciation is $21,400. o Ignore taxes.
Balance Sheet October 31 | |
Assets | |
Cash | $ 18,500 |
Accounts receivable, net of allowance for uncollectible accounts | 80,400 |
Inventory | 231,500 |
Property, plant and equipment, net of $453,000 accumulated depreciation | 906,000 |
Total assets | $1,236,400 |
Liabilities and Stockholders' Equity | |
Accounts payable | $ 222,000 |
Common stock | 780,000 |
Retained earnings | 234,400 |
Total liabilities and stockholders' equity | $1,236,400 |
|
The cash balance at the end of December would be:
$128,520
$66,020
$18,500
$147,020
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