Question
Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted at $220,000 for
Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted at $220,000 for November, $200,000 for December, and $210,000 for January. Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible. The cost of goods sold is 65% of sales. The company desires to have an ending merchandise inventory at the end of each month equal to 50% 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 $22,500. Monthly depreciation is $19,000. Ignore taxes.
40. Expected cash collections in December are: A. $59,400 B. $140,000 C. $199,400 D. $200,000
41. The cost of December merchandise purchases would be: A. $133,250 B. $68,250 C. $130,000 D. $143,000
42. December cash disbursements for merchandise purchases would be: A. $136,500 B. $68,250 C. $133,250 D. $130,000
43. The difference between cash receipts and cash disbursements for December would be: A. $17,900 B. $22,500 C. $40,400 D. $62,900
44. The net income for December would be: A. $40,400 B. $22,500 C. $47,500 D. $28,500
45. The cash balance at the end of December would be: A. $116,900 B. $16,000 C. $100,900 D. $56,400
46. The accounts receivable balance, net of uncollectible accounts, at the end of December would be: A. $82,000 B. $113,400 C. $60,000 D. $54,000
47. Accounts payable at the end of December would be: A. $65,000 B. $68,250 C. $130,000 D. $133,250
48. Retained earnings at the end of December would be: A. $132,500 B. $155,000 C. $196,500 D. $183,900
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started