Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: • Sales are budgeted at $248,000 for November, $288,000 for December, and $220,000 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 70% of the next month's cost of goods sold. Payment for mercha is made in the month following the purchase. • Other monthly expenses to be paid in cash are $17,500. • Monthly depreciation is $10,000. • Ignore taxes. 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 Balance Sheet October 31 What is Retained Earnings at December 31? $ 20,000 79,500 130,200 976,000 $ 1,205,700 $ 244,000 745,000 216,700 $ 1,205,700

Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: • Sales are budgeted at $248,000 for November, $288,000 for December, and $220,000 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 70% of the next month's cost of goods sold. Payment for mercha is made in the month following the purchase. • Other monthly expenses to be paid in cash are $17,500. • Monthly depreciation is $10,000. • Ignore taxes. 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 Balance Sheet October 31 What is Retained Earnings at December 31? $ 20,000 79,500 130,200 976,000 $ 1,205,700 $ 244,000 745,000 216,700 $ 1,205,700

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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