Village Hardware is a retail hardware store. Information about the store's operations follows.

 

•November sales amounted to $540,000.•Sales are budgeted at $580,000 for December and $540,000 for January •Collections are expected to be 60 percent in the month of sale and 38 percent in the month following the sale. Two percent of sales are expected to be uncollectible. Bad debts expense is recognized monthly.

•The store's gross margin is 25 percent of its sales revenue.•A total of 70 percent of the merchandise for resale is purchased in the month prior to the month of sale, and 30 percent is purchased in the month of sale. Payment for merchandise is made in the month following the purchase.

•Other monthly expenses paid in cash amount to $46,600.•Annual depreciation is $474,000.  The company's balance sheet as of November 30, is as follows:

 

VILLAGE HARDWARE, INC.

BALANCE SHEET

NOVEMBER 30,

 Cash$58,000  

 Accounts receivable (net of $8,400 allowance for uncollectible accounts) 166,000   

Inventory 420,000   

Property, plant, and equipment (net of $1,320,000 accumulated depreciation) 1,864,000   

 Total assets$2,508,000  

LIABILITIES AND OWNER'S EQUITY  

Accounts payable$426,000   

Common stock 1,730,000   

Retained earnings 352,000   

 Total liabilities and owner's equity$2,508,000  

 

1.Compute the budgeted cash collections for December

2.Compute the budgeted income (loss) before income taxes for December

3.Compute the projected balance in accounts payable on December 31