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Miles Hardware sells fasteners and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations in 2014 is

Miles Hardware sells fasteners and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations in 2014 is collected as below:

Sales are budgeted at: November: $380,000 December: $390,000 January: $400,000

The following cash collection schedule is used:

The month of sale: 70% Next month: 27% Uncollectible: 3% Cost of goods sold: 65% of sales Desired ending inventory equals to: 80% of the following 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: $22,000 Monthly depreciation: $20,000 Miles declares a dividend payable on Dec 15 of: $12,000 (paid on Jan.15, 2015) Ignore taxes.

Balance Sheet on October 31 Assets

Cash $15,000
Accounts Receivable (net of allowance) $77,000
Inventory $197,600
Property, plant and equipment (net) $992,000
Total Assets $1,281,600

Liabilities and Stockholder's Equity

Accounts Payable $240,000
Common Stock $780,000
Retained Earnings $259,600
Total Liabilities and Stockholders Equity $1,279,600

1) Retained earnings at December 31 will be:

A. $244,000

B. $354,200

C. $405,000

D. $410,000 (Correct Answer)

E. $422,000

2) The cash balance at the end of December would be:

A. $13,000

B. $114,400

C. $197,400 (Correct Answer)

D. $120,400

E. None of the above

*** Please show the work necessary to attain the two correct answers. ***

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