Question

TB MC Qu. 8-129 Dilly Farm Supply is located in a small ... Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted at $306,000 for November, $326,000 for December, and $226,000 for January. Collections are expected to be 70% in the month of sale and 30% in the month following the sale. The cost of goods sold is 75% of sales. The company desires to have an ending merchandise inventory at the end of each month equal to 80% 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 $22,700. Monthly depreciation is $29,000. Ignore taxes.

Balance Sheet October 31

Assets:
Cash $32,000
Accounts receivable 82,500
Merchandise inventory 182,880
Property, plant and equipment, net of $624,000 accumulated depreciation 916,000
Total assets $1,213,380

Liabilities and Stockholders' Equity
Accounts payable $250,000
Common stock 751,000
Retained earnings 212,380
Total liabilities and stockholders' equity $1,213,380

Retained earnings at the end of December would be:_______

Answer 1

retained earnings at December 31, 202x = $266,980

Step-by-step explanation:

income statement for November and December:

Sales revenue $632,000

COGS ($474,000)

Gross profit $158,000

Operating expenses:

Depreciation ($58,000)

Other expenses ($45,400)

Net income $54,600

retained earnings = previous balance + net income - dividends paid = $212,380 + $54,600 - $0 = $266,980