Reference no: EM132790743
Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:
- Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for January.
- Collections are expected to be 65% in the month of sale and 35% in the month following the sale.
- The cost of goods sold is 80% of sales.
- The company desires to have an ending merchandise inventory at the end of each month equal to 70% 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 $21,100.
- Monthly depreciation is $21,000.
Ignore taxes.
Balance Sheet
October 31Assets
Cash$25,000
Accounts receivable 77,000
Merchandise inventory 162,400
Property, plant and equipment, net of $624,000
accumulated depreciation 1,026,000
Total assets$1,290,400
Liabilities and Stockholders' Equity
Accounts payable$239,000
Common stock 740,000
Retained earnings 311,400
Total liabilities and stockholders' equity$1,290,400
Problem 1: December cash disbursements for merchandise purchases would be