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

• Sales are budgeted at $291,000 for November, $311,000 for December, and $211,000 for January.
• Collections are expected to be 70% in the month of sale and 30% 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 80% 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 $21,200.
• Monthly depreciation is $21,500.
• Ignore taxes.

Balance Sheet

October 31AssetsCash$25,500Accounts receivable77,500Merchandise inventory162,900Property, plant and equipment, net of $624,000 accumulated depreciation1,027,000Total assets$1,292,900Liabilities and Stockholders' EquityAccounts payable$240,000Common stock741,000Retained earnings311,900Total liabilities and stockholders' equity$1,292,900

Expected cash collections in December are:

Multiple Choice

• $87,300
• $311,000
• $305,000
• $217,700