Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted at $296,000 for November, $316,000 for December, and $216,000 for January. Collections are expected to be 65% in the month of sale and 35% in the month following the sale. The cost of goods sold is 80% of sales. The company desires to have an ending merchandise inventory at the end of each month equal to 70% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase. Other monthly expenses to be paid in cash are $21,700. Monthly depreciation is $24,000. Ignore taxes. Balance Sheet October 31 Assets Cash $ 28,000 Accounts receivable 80,000 Merchandise inventory 165,760 Property, plant and equipment, net of $624,000 accumulated depreciation 1,010,000 Total assets $ 1,283,760 Liabilities and Stockholders' Equity Accounts payable $ 242,000 Common stock 746,000 Retained earnings 295,760 Total liabilities and stockholders' equity $ 1,283,760 The cost of December merchandise purchases would be: Multiple Choice $252,800 $196,800 $120,960 $236,800