Dilbert Farm Supply is located in a small town in the rural west. Data regarding

Question

Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store's

operations follow:
Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000 for
January.
Collections are expected to be 80% in the month of sale, 19% in the month following the sale,
and 1% uncollectible.
The cost of goods sold is 65% of sales.
The company desires to have an ending merchandise inventory at the end of each month equal
to 60% 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 $20,300.
Monthly depreciation is $20,000.
Ignore taxes.

Balance sheet october 31

assets

cash $27000

accounts receivable, net allowance for uncollectible accounts $79,000

Merchandise inventory $101,400

Property, plant and equipment. net of $574,000 accumulated depreciation 1,082,000

Total Assets $1,289,400

Liabilities and Stockholders' Equity

Accounts payable $169,000

Common Stock 740,000

Retained Earnings 380,400

Total liabilities and stockholders' equity $1,289,400

This was posted previously but I'm having problems with the following and please show equations:

The difference between cash receipts and cash disburstments for December would be:

A. 55,800, B. 37,900 C. 93,700 D. 17,900

The net income for December would be:

A. 60,200 B 37,900 C. 40,200 D. 55,800

The cash balance at the end of December would be:

A. 180,500 B. 153,500 C. 82,800 D. 27,000

Accounts Payable at the end of December would be:

A. 81,900 B. 141,700 C. 59,800 D. 149,500

Retained earnings at the end of December would be:

A. 380,400 B. 418,300 C. 471,300 D. 466,400

Explanation / Answer

260000x19%=49400

230000x80%=184000

230000x19%=43700

210000x80%=168000

NOv($) Dec($) Jan($) Sales 260000 230000 210000 CoGS (65% of sales) 169000 149500 136500 ENding MErchandise inventory (60% of next months COGS) 149500x60%=89700 =136500x60%=81900 Accounts receivable(80% in month of sales, 19% in following month and 1% uncollecible) 260000x80%=208000

260000x19%=49400

230000x80%=184000

230000x19%=43700

210000x80%=168000

Expected CAsh Collection in DEC 184000+49400 =$233400 Cost of dec Mercendise purchase(60% 0f next months cogs) 136500x 60=$81900 Dec cash disbursementequal to dec merchandise purchase =$81900

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