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 $414,000 for November, $424,000 for December, and $434,000 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 65% 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 $34,650.

o Monthly depreciation is $22,400.

o Ignore taxes.

Balance Sheet October 31 Assets Cash $16,800 Accounts receivable, net of allowance for uncollectible accounts 77,500 Inventory 234,500 Property, plant and equipment, net of $584,000 accumulated depreciation 1,168,000 Total assets $1,496,800 Liabilities and Stockholders' Equity Accounts payable $330,000 Common stock 780,000 Retained earnings 386,800 Total liabilities and stockholders' equity $1,496,800

The net income for December would be:

$113,750

$91,350

$112,880

$78,630