aimeer
Nov 15, 2009, 06:29 PM
Carver Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow:
Sales are budgeted at $430,000 for November, $360,000 for December, and $150,000 for January.
Collections are expected to be 83% in the month of sale, 4% in the month following the sale, and 13% uncollectible.
The cost of goods sold is 77% of sales.
The company purchases 56% of its merchandise in the month prior to the month of sale and 44% in the month of sale. Payment for merchandise is made in the month following the purchase.
Other monthly expenses to be paid in cash are $23,600.
Monthly depreciation is $28,600.
Ignore taxes.
Statement of Financial Position
October 31
Assets:
Cash $ 25,000
Accounts receivable (net of allowance for uncollectible accounts) 58,000
Inventory 151,500
Property, plant and equipment (net of $515,000 accumulated depreciation) 1,042,000
Total assets $1,276,500
Liabilities and Stockholders' Equity:
Accounts payable $ 232,000
Common stock 650,000
Retained earnings 394,500
Total liabilities and stockholders' equity 1,276,500
The accounts receivable balance, net of uncollectible accounts, at the end of December would be:
a. $16,720
b. $43,600
c. $20,230
d. $14,400
Sales are budgeted at $430,000 for November, $360,000 for December, and $150,000 for January.
Collections are expected to be 83% in the month of sale, 4% in the month following the sale, and 13% uncollectible.
The cost of goods sold is 77% of sales.
The company purchases 56% of its merchandise in the month prior to the month of sale and 44% in the month of sale. Payment for merchandise is made in the month following the purchase.
Other monthly expenses to be paid in cash are $23,600.
Monthly depreciation is $28,600.
Ignore taxes.
Statement of Financial Position
October 31
Assets:
Cash $ 25,000
Accounts receivable (net of allowance for uncollectible accounts) 58,000
Inventory 151,500
Property, plant and equipment (net of $515,000 accumulated depreciation) 1,042,000
Total assets $1,276,500
Liabilities and Stockholders' Equity:
Accounts payable $ 232,000
Common stock 650,000
Retained earnings 394,500
Total liabilities and stockholders' equity 1,276,500
The accounts receivable balance, net of uncollectible accounts, at the end of December would be:
a. $16,720
b. $43,600
c. $20,230
d. $14,400