Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: • Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 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 sol Payment for merchandise is made in the month following the purchase. • Other monthly expenses to be paid in cash are $21,100. • Monthly depreciation is $21,000. • Ignore taxes. Balance Sheet October 31 Assets Cash $ 25,000 Accounts receivable 77,000 Merchandise inventory Property, plant and equipment, net of $624,000 accumulated depreciation 162,400 1,026,000 Total assets $ 1,290,400 Liabilities and Stockholders' Equity Accounts payable $ 239,000 Common stock 740,000 Retained earnings 311,400 Total liabilities and stockholders' equity $ 1,290,400 Retained earnings at the end of December would be:

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Question
Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:
• Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 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 $21,100.
• Monthly depreciation is $21,000.
• Ignore taxes.
Balance Sheet
October 31
Assets
Cash
$ 25,000
Accounts receivable
77,000
Merchandise inventory
Property, plant and equipment, net of $624,000 accumulated depreciation
162,400
1,026,000
$ 1,290,400
Total assets
Liabilities and Stockholders' Equity
Accounts payable
$ 239,000
Common stock
740,000
Retained earnings
311,400
Total liabilities and stockholders' equity
$ 1,290,400
Retained earnings at the end of December would be:
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 $290,000 for November, $310,000 for December, and $210,000 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 $21,100. • Monthly depreciation is $21,000. • Ignore taxes. Balance Sheet October 31 Assets Cash $ 25,000 Accounts receivable 77,000 Merchandise inventory Property, plant and equipment, net of $624,000 accumulated depreciation 162,400 1,026,000 $ 1,290,400 Total assets Liabilities and Stockholders' Equity Accounts payable $ 239,000 Common stock 740,000 Retained earnings 311,400 Total liabilities and stockholders' equity $ 1,290,400 Retained earnings at the end of December would be:
Retained earnings at the end of December would be:
Multiple Choice
$347,200
$325,100
$353,400
$311,400
Transcribed Image Text:Retained earnings at the end of December would be: Multiple Choice $347,200 $325,100 $353,400 $311,400
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Budgeting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education