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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 $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.

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