Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000 for January.
Collections are expected to be 80% in the month of sale, 19% in the month following the sale, and 1% uncollectible.
The cost of goods sold is 65% of sales.
The company desires to have an ending merchandise inventory at the end of each month equal to 60% 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 $20,300.
Monthly depreciation is $20,000.
Ignore taxes.
Balance sheet october 31
Assets
Accounts receivable, net allowance for uncollectible accounts $79,000
Merchandise inventory $101,400
Property, plant and equipment. net of $574,000 accumulated depreciation 1,082,000
Total Assets $1,289,400
Liabilities and Stockholders' Equity
Accounts payable $169,000
Common Stock 740,000
Retained Earnings 380,400
Total liabilities and stockholders' equity $1,289,400
1. The difference between cash receipts and cash disburesments for December would be:.
A. $55,800
B. $37,900
C. $93,700
D. $17,900
2. The net income for December would be:.
A. $60,200
B. $37,900
C. $40,200
D. $55,800
3. The cash balance at the end of December wuld be:.
A. $185,000
B. $153,500
C. $82,800
D. $27,000
4. The accounts receivable balance, net of uncollectible accounts, at the end of December would be:.
A. $46,000
B. $93,100
C. $43,700
D. $81,300
5. Accounts payable at the end of December would be:.
A. $81900
B. $141,700
C. $59,800
D. $149,500
6. Retained earnings at the end of December would be:.
A. $380,400
B $418,300
C. $471,300
D. $466,400

Dilbert Farm Supply

1. The difference between cash receipts and cash disbursements for December would be:.

A. $55,800

2. The net income for December would be:.

C. $40,200

3. The cash balance at the end of December would be:.

A. $185,000

B. $153,500

C. $82,800

D. $27,000

$176,550.

4. The accounts receivable balance, net of uncollectible accounts, at the end of December would be:.

C. $43,700

5. Accounts payable at the end of December would be:.

B. $141,700

6. Retained earnings at the end of December would be:.

C. $471,300

Explanation:

a)  Sales Budget        November       December       January

Sales                          $260,000         $230,000        $210,000

b) Collections:

80% month of sale   $208,000          $184,000         $168,000

19% following month  $75,050           $49,400           $43,700

Total collections      $283,050        $233,400          $211,700

c) Cost of goods sold   $169,000           $149,500        $136,500

d) Ending Inventory       $89,700            $81,900

e) Beginning Inventory $101,400           $89,700            $81,900

f) Purchases                $157,300           $141,700

g) Disbursements:

Payment purchases $169,000           $157,300           $141,700

Other expenses        $20,300            $20,300           $20,300

Total disbursement $189,300           $177,600          $162,000

h) Accounts Receivable           Nov.            Dec.

Beginning balance (net)    $75,050          $49,400

Credit Sales                    $260,000        $230,000

Collections                     ($283,050)      ($233,400)

Ending balance                 $52,000          $46,000

Uncollectibles                     $2,600            $2,300

Net of uncollectibles        $49,400          $43,700

i) Accounts Payable       Nov.                 Dec.

Beginning balance   $169,000          $157,300

Credit purchases     $157,300            $141,700

Payments               ($169,000)         ($157,300)

Ending balance       $157,300            $141,700

j) Difference between collections and disbursements:

                                  November       December       January

Total collections       $283,050         $233,400           $211,700

Total disbursement   $189,300          $177,600         $162,000

Difference                   $93,750           $55,800          $49,700

k) Income Statement

                                  November        December        January

Sales                          $260,000         $230,000        $210,000

Cost of goods sold    $169,000          $149,500        $136,500

Gross profit                  $91,000           $80,500          $73,500

Other expenses         $20,300            $20,300         $20,300

Depreciation               $20,000           $20,000         $20,000

Net Income                 $50,700            $40,200         $33,200

Retained Earnings   $380,400            $431,400        $471,300

Retained Earnings    $431,100            $471,300        $504,500

l) Cash balance

                                November        December          January

Beginning balance     $27,000          $120,750          $176,550

Total collections       $283,050         $233,400           $211,700

Total disbursement  $189,300          $177,600          $162,000

Ending balance        $120,750          $176,550         $226,250

m) Opening balance of Cash:

Total Assets                        $1,289,400

less stated assets              $1,262,400 ($79,000 + 101,400 + 1,082,000)

Difference = Cash balance = $27,000

answer; risk transference;