Question
Village Hardware is a retail hardware store. Information about the store's operations follows. November 20x4 sales amounted to $440,000. Sales are budgeted at $480,000 for
Village Hardware is a retail hardware store. Information about the store's operations follows. November 20x4 sales amounted to $440,000. Sales are budgeted at $480,000 for December 20x4 and $440,000 for January 20x5. 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 stores 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 $45,600. Annual depreciation is $444,000. The company's balance sheet as of November 30, 20x4, is as follows: VILLAGE HARDWARE, INC. BALANCE SHEET NOVEMBER 30, 20x4 ASSETS Cash $ 48,000 Accounts receivable (net of $7,400 allowance for uncollectible accounts) 156,000 Inventory 320,000 Property, plant, and equipment (net of $1,220,000 accumulated depreciation) 1,764,000 Total assets $ 2,288,000 LIABILITIES AND OWNER'S EQUITY Accounts payable $ 351,000 Common stock 1,630,000 Retained earnings 307,000 Total liabilities and owners equity $ 2,288,000
Compute the budgeted cash collections for December 20x4.
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started