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 $308,000 for november, $328,000 for december, and $228,000 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 $22,900. monthly depreciation is $30,000. ignore taxes. balance sheet october 31 assets cash $ 35,500 accounts receivable 86,000 merchandise inventory 290,900 property, plant and equipment, net of $624,000 accumulated depreciation 923,000 total assets $ 1,335,400 liabilities and stockholders' equity accounts payable $ 257,000 common stock 758,000 retained earnings 320,400 total liabilities and stockholders' equity $ 1,335,400 expected cash collections in december are:

Answer 1

Expected cash collections for Dilly Farm Supply in December are calculated by adding 65% of December's sales to 35% of November's sales, resulting in a total of $321,000.

Step-by-step explanation:

To calculate the expected cash collections for Dilly Farm Supply in December, we need to consider the sales budgeted for November and December and the fact that collections are expected to be 65% in the month of sale and 35% in the month following the sale.

The sales for November are budgeted at $308,000, and for December, they are $328,000. Therefore, the collections in December will include 65% of December's sales and 35% of November's sales. This can be calculated as:

(65% of $328,000) for December's sales = $213,200

(35% of $308,000) for November's sales = $107,800

Total expected cash collections in December = $213,200 + $107,800 = $321,000.