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Gibson Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted at $254,000 for November,
Gibson Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted at $254,000 for November, $294,000 for December, and $221,000 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 80% of sales. The company desires to have an ending merchandise inventory at the end of each month equal to 90% 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 $15,600. Monthly depreciation is $26,500. Ignore taxes. $ Balance Sheet October 31 Assets Cash Accounts receivable Merchandise inventory Property, plant and equipment, net of $624,000 accumulated depreciation Total assets 32,000 82,500 287,400 916,000 $1,317,900 $ Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings 250,000 751,000 316,900 Total liabilities and stockholders' equity $1,317,900 Expected cash collections in December are: Multiple Choice o $294,000 o $1015 $101,600 o $278,000 $176,400
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