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

• Sales are budgeted at $308,000 for November, $328,000 for December, and $228,000 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 $22,900.
• Monthly depreciation is $30,000.
• Ignore taxes.

Balance Sheet
October 31
Assets
Cash	$ 35,500
Accounts receivable	86,000
Merchandise inventory	172,480
Property, plant and equipment, net of $624,000 accumulated depreciation	923,000
Total assets	$ 1,216,980
Liabilities and Stockholders' Equity
Accounts payable	$ 257,000
Common stock	758,000
Retained earnings	201,980
Total liabilities and stockholders' equity	$ 1,216,980

Retained earnings at the end of December would be:

Multiple Choice

• $199,480

• $201,980

• $223,380

• $254,780