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Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted at $290,000 for

  1. Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

    Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 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 $21,100. Monthly depreciation is $21,000. Ignore taxes.

    Balance Sheet October 31
    Assets
    Cash $ 25,000
    Accounts receivable 77,000
    Merchandise inventory 162,400
    Property, plant and equipment, net of $624,000 accumulated depreciation 1,026,000
    Total assets $ 1,290,400
    Liabilities and Stockholders' Equity
    Accounts payable $ 239,000
    Common stock 740,000
    Retained earnings 311,400
    Total liabilities and stockholders' equity $ 1,290,400
    The difference between cash receipts and cash disbursements for December would be:

    $19,200

    $13,700

    $38,700

    $46,600

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