Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:
• Sales are budgeted at $200,000 for November, $220,000 for December, and $210,000 for January.
• Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible.
• The cost of goods sold is 62% of sales.
• The company desires to have an ending merchandise inventory at the end of each month equal to 50% 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 $22,500.
• Monthly depreciation is $19,000.
• Ignore taxes. Statement of Financial Position October 31 Assets Cash $ 16,000 Accounts receivable (net of allowance for uncollectible accounts) 76,000 Merchandise inventory 71,500 Property, plant & equipment (net of $536,000 accumulated depreciation) 956,000 Total assets $1,119,500 Liabilities & Stockholders' Equity Accounts payable $ 147,000 Common stock 840,000 Retained earnings 132,500 Total Liabilities & Stockholders' equity $1,119,500
1. Expected cash collections in December are:
2. The cost of December merchandise purchases would be:
3. December cash disbursements for merchandise purchases would be:
4. The difference between cash receipts and cash disbursements for December would be:
5. The net income for December would be:
6. The cash balance at the end of December would be:
7. The accounts receivable balance, net of uncollectible accounts, at the end of December would be