Roha Company, a retail store, prepares its master budget on a quarterly basis. The budget officer has gathered the following data: a. Budgeted Sales for the next three months

April

May

June

Cash Sales Credit Sales $ 20,000 $ 359,000

$ 24,000 $ 437,000

$ 30,000 S 548,000

b. The company expects to collect 50% of credit sales in the month of sales, 48% in the month following the sales, and 2% to be uncollectible. The company recognizes bad debt expenses in the month sales are made,

c. The company's gross margin is 40 % of sales.

d. The ending merchandise inventory should be 20% of the following month's cost of goods sold.

e. Payment for merchandise purchases is expected to be 60% in the month of purchase and 40% paid in the following month. f. Monthly selling and administrative expenses to be paid in cash are $35,000.

g. Monthly depreciation expense is $10,000.

h. The company will declare $5,000 dividend in May, which will be paid in June.

i. The company's retained earnings balance at the end of March is $463,950.

12 Assuming that the company pays no interest expense or income tax expense, what would be the company's retained earnings

balance at the end of May?

A.

B.

$634,190

$733,610

C. $738,610

D. $744,570 E. None of the above.