### Dilly Farm Supply Operations Analysis#### OverviewDilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations are as follows:- **Sales Projections:** - November: $293,000 - December: $313,000 - January: $213,000- **Collections:** - 65% of sales in the month of sale. - 35% in the month following the sale.- **Cost of Goods Sold (COGS):** 80% of sales.- **Inventory Strategy:** - Desire to have ending merchandise inventory at the end of each month equal to 70% of the next month's COGS. - Payment for merchandise is made in the month following the purchase.- **Other Expenses:** - Monthly expenses: $21,400 - Monthly depreciation: $22,500- **Taxes:** Ignored for this analysis.#### Balance Sheet as of October 31- **Assets:** - Cash: $26,500 - Accounts Receivable: $78,500 - Merchandise Inventory: $164,000 - Property, Plant, and Equipment (Net, with $624,000 accumulated depreciation): $1,007,000 - **Total Assets:** $1,276,000- **Liabilities and Stockholders' Equity:** - Accounts Payable: $239,000 - Common Stock: $743,000 - Retained Earnings: $294,000 - **Total Liabilities and Stockholders' Equity:** $1,276,000#### Cash Flow AnalysisThe analysis question asks: What would be the difference between cash receipts and cash disbursements for December?#### Answer Options- $18,300- $12,500- $39,000- $43,300#### Diagram ExplanationThe details provided indicate a balance sheet that outlines the asset and liability distribution for Dilly Farm Supply as of October 31. This financial snapshot is crucial for understanding the company's current financial position before projecting future cash flow needs and potential discrepancies.This educational content aims to help users understand financial statements, cash flow analysis, and budgeting for business operations.

Cash Receipts - Cash receipts are the amount collected by the company as per the budgeted sales.…

Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: • Sales are budgeted at $293,000 for November, $313,000 for December, and $213,000 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 $21,400. • Monthly depreciation is $22,500. . Ignore taxes. Assets Cash Accounts receivable Merchandise inventory Property, plant and equipment, net of $624,808 accumulated depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity The difference between cash receipts and cash disbursements for December would be: Multiple Choice OOO O $18,300 $12.500 Balance Sheet October 31 $39.000 $43.300 $ 26,500 78,500 164,980 1,007,000 $ 1,276,080 $ 239,000 743,000 294,080 $ 1,276,080

Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: • Sales are budgeted at $293,000 for November, $313,000 for December, and $213,000 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 $21,400. • Monthly depreciation is $22,500. . Ignore taxes. Assets Cash Accounts receivable Merchandise inventory Property, plant and equipment, net of $624,808 accumulated depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity The difference between cash receipts and cash disbursements for December would be: Multiple Choice OOO O $18,300 $12.500 Balance Sheet October 31 $39.000 $43.300 $ 26,500 78,500 164,980 1,007,000 $ 1,276,080 $ 239,000 743,000 294,080 $ 1,276,080

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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Use the following information for questions 5 & 6: Dilly Farm Supply is 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. Assets Cash A/R Inventory PP&E, net of $624,000 accumulated depreciation Total assets Liabilities and Stockholders' Equity A/P Common Stock Retained Earnings Total liabilities and stockholders' equity 5. 6. Balance Sheet October 31 a. b. Expected cash collections in December are: C. d. a. b.…
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