Problem:
Use any data to answer the following question:
Carter Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow:
Sales are budgeted at $XXX for November, $YYY for December, and $ZZZ for January.
Collections are expected to be XX% in the month of sale, YY% in the month following the sale, and Z% uncollectible.
The cost of goods sold is XX% of sales.
The company purchases XX% of its merchandise in the month prior to the month of sale and YY% in the month of sale. Payment for merchandise is made in the month following the purchase.
Other monthly expenses to be paid in cash are $XXX.
Monthly depreciation is $XXX.
Ignore taxes.
Statement of Financial Position
October 31
Assets
Cash
Accounts receivable (net of allowance for uncollectible accounts)
Inventory
Property, plant and equipment (net of $XXX accumulated depreciation)
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Common stock
Retained earnings
Total liabilities and stockholders' equity
1) The net income for December would be:
2) The cash balance at the end of December would be:
3) The accounts receivable balance, net of uncollectible accounts, at the end of December would be:
4) Accounts payable at the end of December would be:
5) Retained earnings at the end of December would be: