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Retained earnings at December 31 will be: The cash balance at the end of December would be:

Retained earnings at December 31 will be: The cash balance at the end of December would be:

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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Miles Hardware sells fasteners and general building supplies to building contractors in a medium-sized town in Montana, data regarding the store's operations in 2014 is collected as below: Sales are budgeted at: November $ 380,000 December $ 390,000 January $ 400,000 The following cash collection schedule is used: The month of sale 70% Next month 27% Uncollectible 3% Cost of goods sold: 65% of sales Desired ending inventory equals to: 80% of the following 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: $ 22,000 Monthly depreciation: $ 20,000 Miles declares a dividend payable on December 15 of: $ 12,000 (paid on January 15, 2015) Ignore taxes. Balance Sheet on October 31 Assets Cash $15,000 Accounts Receivable (net of allowance) $ 77,000 Inventory $ 197,600 Property, plant and equipment (net) $ 992,000 Total Assets $ 1,281,600 Liabilities and Stockholder's Equity Accounts Payable $ 240,000 Common Stock $ 780,000 Retained Earnings $ 259,600 Total Liabilities and Stockholders Equity $ 1,279,600 Retained earnings at December 31 will be: The cash balance at the end of December would be:
Transcribed Image Text:Miles Hardware sells fasteners and general building supplies to building contractors in a medium-sized town in Montana, data regarding the store's operations in 2014 is collected as below: Sales are budgeted at: November $ 380,000 December $ 390,000 January $ 400,000 The following cash collection schedule is used: The month of sale 70% Next month 27% Uncollectible 3% Cost of goods sold: 65% of sales Desired ending inventory equals to: 80% of the following 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: $ 22,000 Monthly depreciation: $ 20,000 Miles declares a dividend payable on December 15 of: $ 12,000 (paid on January 15, 2015) Ignore taxes. Balance Sheet on October 31 Assets Cash $15,000 Accounts Receivable (net of allowance) $ 77,000 Inventory $ 197,600 Property, plant and equipment (net) $ 992,000 Total Assets $ 1,281,600 Liabilities and Stockholder's Equity Accounts Payable $ 240,000 Common Stock $ 780,000 Retained Earnings $ 259,600 Total Liabilities and Stockholders Equity $ 1,279,600 Retained earnings at December 31 will be: The cash balance at the end of December would be:
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