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Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: o Sales are budgeted at $260,000

Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: o Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000 for January. o Collections are expected to be 80% in the month of sale, 19% in the month following the sale, and 1% uncollectible. o The cost of goods sold is 65% of sales. o The company desires to have an ending merchandise inventory at the end of each month equal to 60% of the next 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 $20,300. o Monthly depreciation is $20,000. o Ignore taxes.

Balance Sheet October 31
Assets
Cash $27,000
Accounts receivable, net of allowance for uncollectible accounts 79,000
Merchandise inventory 101,400
Property, plant and equipment, net of $574,000 accumulated depreciation 1,082,000
Total assets $1,289,400
Liabilities and Stockholders' Equity
Accounts payable $169,000
Common stock 740,000
Retained earnings 380,400
Total liabilities and stockholders' equity $1,289,400

The net income for December would be:

$37,900

$60,200

$40,200

$55,800

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