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Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: • Sales are budgeted at $309,000 for November, $329,000 for December, and $229,000 for January. • Collections are expected to be 70% in the month of sale and 30% 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 80% 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 $23,000. Monthly depreciation is $30,500. . Ignore taxes. Assets Cash Balance Sheet October 31 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 The cost of December merchandise purchases would be: 36,000 86,500 185,400 924,000 $1,231,900. $ 258,000 759,000 214,900 $1,231,900

Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: • Sales are budgeted at $309,000 for November, $329,000 for December, and $229,000 for January. • Collections are expected to be 70% in the month of sale and 30% 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 80% 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 $23,000. Monthly depreciation is $30,500. . Ignore taxes. Assets Cash Balance Sheet October 31 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 The cost of December merchandise purchases would be: 36,000 86,500 185,400 924,000 $1,231,900. $ 258,000 759,000 214,900 $1,231,900

FINANCIAL ACCOUNTING
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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Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: • Sales are budgeted at $309,000 for November, $329,000 for December, and $229,000 for January. Collections are expected to be 70% in the month of sale and 30% 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 80% 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 $23,000. Monthly depreciation is $30,500. • Ignore taxes. Assets Cash Balance Sheet October 31 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 The cost of December merchandise purchases would be: 36,000 86,500 185,400. 924,000 $1,231,900 $ $ 258,000 759,000 214,900 $1,231,900
Transcribed Image Text:Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: • Sales are budgeted at $309,000 for November, $329,000 for December, and $229,000 for January. Collections are expected to be 70% in the month of sale and 30% 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 80% 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 $23,000. Monthly depreciation is $30,500. • Ignore taxes. Assets Cash Balance Sheet October 31 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 The cost of December merchandise purchases would be: 36,000 86,500 185,400. 924,000 $1,231,900 $ $ 258,000 759,000 214,900 $1,231,900
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