Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted at $299,000 for November, $319,000 for December, and $219,000 for January.Collections are expected to be 65% in the month of sale and 35% in the month following the sale.The cost of goods sold is 80% 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 merchandise is made in the month following the purchase.Other monthly expenses to be paid in cash are $22,000.Monthly depreciation is $25,500.Ignore taxes. Balance SheetOctober 31Assets Cash$32,500Accounts receivable 81,500Merchandise inventory 167,440Property, plant and equipment, net of $624,000 accumulated depreciation 1,013,000Total assets$1,294,440 Liabilities and Stockholders' Equity Accounts payable$248,000Common stock 749,000Retained earnings 297,440Total liabilities and stockholders' equity$1,294,440 Accounts payable at the end of December would be: Multiple Choice $122,640 $255,200 $76,560 $199,200

Cost of goods sold= Sales x Percentages of sales

Answered: Dilly Farm Supply is located in a small…

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 $299,000 for November, $319,000 for December, and $219,000 for January.
Collections are expected to be 65% in the month of sale and 35% in the month following the sale.
The cost of goods sold is 80% 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 merchandise is made in the month following the purchase.
Other monthly expenses to be paid in cash are $22,000.
Monthly depreciation is $25,500.
Ignore taxes.

Balance Sheet October 31
Assets
Cash	$	32,500
Accounts receivable		81,500
Merchandise inventory		167,440
Property, plant and equipment, net of $624,000 accumulated depreciation		1,013,000
Total assets	$	1,294,440

Liabilities and Stockholders' Equity
Accounts payable	$	248,000
Common stock		749,000
Retained earnings		297,440
Total liabilities and stockholders' equity	$	1,294,440

Accounts payable at the end of December would be:

Multiple Choice

$122,640
$255,200
$76,560
$199,200

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