Use the following information/chart to answer questions 10 and 11.

Kelly Company is a retail sporting goods store that uses accrual accounting for its records. Facts regarding Kelly's operations are as follows:

Sales are budgeted at $220,000 for December Year 1 and $200,000 for January Year 2

Collections are expected to be 60% in the month of sale and 38% in the month following the sale (Hint: Bad Debts expense) Gross margin is 25% of sales. A total of 80% of merchandise held for resale is purchased in the month prior to the month of sale and 20% is purchased in the month of sale. Payment for merchandise is made in the month following the purchase. Other expected monthly expenses to be paid in cash are $22,600. Annual depreciation is $216,000

Below is Kelly's statement of financial position at November 30, Year 1: