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 followling 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 depreclation is $31,000. gnore taxes Balance Sheet October 31 Assets Сдрh 36,500 87,000 Accounts receivable Merchandise inventory Froperty, plant and equipment, net of $624,000 accumulated depreciation 195,300 925,000 $1,243,B00 Total assets Liabilities and Stockholders Equity ccounts payable 259,000 Conmon stock Retained earnings 760,000 224,B00 Total liabilitien and stockholdera equity $1,243,B00 Retained earnings at the end of December would be: Multiple Cholce $278,800 $308,600 $284,500 $224,800

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

13 Answer 14 The correct answer is $308600 16 Balance of Retained earning at the end of December = Opening balance + Net Income 17 = opening balance + (sales - cost of goods sold-cash expenses-depreciation) 18 = 224800+((310000+330000)-(70%*(310000+330000)) - (23100*2)-(31000*2)) 19 = 224800+83800 20 = $ 308600 22 The correct answer is $ 308600