Reference no: EM13571367
Carner 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 $370,000 for November, $360,000 for December, and $340,000 for January.
• Collections are expected to be 85% in the month of sale, 13% in the month following the sale, and 2% uncollectible.
- The cost of goods sold is 70% of sales.
• The company purchases 30% of its merchandise in the month prior to the month of sale and 70% 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 $24,600.
- Monthly depreciation is $17,000.
- Ignore taxes.
Statement of Financial Position October 31
Assets
Cash $19,000
Accounts receivable (net of allowance for uncollectible accounts) 83,000
Inventory 77,700
Property, plant and equipment (net of $502,000 accumulated depreciation) 968,000
Total assets $1,147,700
Liabilities and Stockholders' Equity
Accounts payable $259,000
Common stock 800,000
Retained earnings 88,700
Total liabilities and stockholders' equity $1,147,700
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: