December cash disbursements for merchandise purchases would

Reference no: EM13604329

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

Reference no: EM13604329

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