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

• Sales are budgeted at $248,000 for November, $288,000 for December, and $220,000 for January.
• Collections are expected to be 60% in the month of sale and 40% in the month following the sale.
• The cost of goods sold is 75% 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 $17,500.
• Monthly depreciation is $20,000.
• Ignore taxes.

Balance Sheet

October 31 Assets Cash $ 20,000 Accounts receivable 79,500 Merchandise inventory 227,400 Property, plant and equipment, net of $624,000 accumulated depreciation 976,000 Total assets $ 1,302,900 Liabilities and Stockholders' Equity Accounts payable $ 244,000 Common stock 745,000 Retained earnings 313,900 Total liabilities and stockholders' equity $ 1,302,900

Expected cash collections in December are:

Multiple Choice

• $288,000
• $99,200
• $272,000
• $172,800