Question
Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted at $302,000 for
Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:
Sales are budgeted at $302,000 for November, $322,000 for December, and $222,000 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 $22,300.
Monthly depreciation is $27,000.
Ignore taxes.
Balance Sheet | |||||
October 31 | |||||
Assets | |||||
---|---|---|---|---|---|
Cash | $ 32,500 | ||||
Accounts receivable | 83,000 | ||||
Merchandise inventory | 287,900 | ||||
Property, plant and equipment, net of $624,000 accumulated depreciation | 917,000 | ||||
Total assets | $ 1,320,400 | ||||
Liabilities and Stockholders' Equity | |||||
Accounts payable | $ 251,000 | ||||
Common stock | 752,000 | ||||
Retained earnings | 317,400 | ||||
Total liabilities and stockholders' equity | $ 1,320,400 |
Expected cash collections in December are:
Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: - Sales are budgeted at $302,000 for November, $322,000 for December, and $222,000 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. purchase. - Other monthly expenses to be paid in cash are $22,300. - Monthly depreciation is $27,000. - Ignore taxes. Expected cash collections in December are: Multiple Choice $315,000 $322,000 $209,300 $105,700
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