Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:
Sales are budgeted at $304,000 for November, $324,000 for December, and $224,000 for January.
Collections are expected to be 60% in the month of sale and 40% in the month following the sale.
The cost of goods sold is 75% of sales.
The company desires to have an ending merchandise inventory at the end of each month equal to 90% of the next 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 are $22,500.
Monthly depreciation is $2,000.
Ignore taxes.
Balance Sheet
October 31
Assets
Cash
Accounts receivable
Merchandise inventory
Property, plant and equipment, net of $624,000 accumulated depreciation
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Common stock
Retained earnings
Total liabilities and stockholders' equity
Retained earnings at the end of December would be:
$ 33,500
84,000
205,200
919,000
$ 1,241,700
$ 253,000
754,000
234,700
$ 1,241,700
Multiple Choice
$324,700
$293,700
$342,700
$294,700
