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. Expected cash collections in December are: a. b. Balance Sheet October 31 C. d. a. b. C. d. $310,000 $101,500 $303,000 $201,500 Retained earnings at the end of December would be: $325,100 $311,400 $25,000 77,000 162,400 1,026,000 $1,290,400 $353,400 $347,200 $239,000 740,000 311,400 $1,290,400

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. Expected cash collections in December are: a. b. Balance Sheet October 31 C. d. a. b. C. d. $310,000 $101,500 $303,000 $201,500 Retained earnings at the end of December would be: $325,100 $311,400 $25,000 77,000 162,400 1,026,000 $1,290,400 $353,400 $347,200 $239,000 740,000 311,400 $1,290,400

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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