Question

Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow. • Sales are budgeted at $310,000 for November, $330,000 for December, and $230,000 for January . Collections are expected to be 60% in the month of sale and 40% in the month following the sale • The cost of goods sold is 70% of sales • The company desires to have an ending merchandise inventory at the end of each month equal to 90% 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 $23,100 • Monthly depreciation is $31,000. • Ignore taxes

Answer 1

А Particulars December 2 Cash collections from November sales $ 124,000 3 Cash collections from December sales $ 198,000 4 Expected cash collections in December $ 322,000 6 Hence, the correct option is $322,000.

Particulars December 2 Cash collections from November sales =310000*0.4 3 Cash collections from December sales 1=330000*0.6 4 Expected cash collections in December —+B2+B3 6 Hence, the correct option is $322,000.