87. Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store’s
operations follow:
o Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000 for January.
o Collections are expected to be 80% in the month of sale, 19% in the month following the sale, and
1% uncollectible.
o The cost of goods sold is 65% of sales.
o 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.
o Other monthly expenses to be paid in cash are $20,300.
o Monthly depreciation is $20,000.
o Ignore taxes.
Balance Sheet
October 31
Assets
Cash $27,000
Accounts receivable, net of 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
December cash disbursements for merchandise purchases would be:
88. Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store’s
operations follow:
o Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000 for January.
o Collections are expected to be 80% in the month of sale, 19% in the month following the sale, and
1% uncollectible.
o The cost of goods sold is 65% of sales.
o 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.
o Other monthly expenses to be paid in cash are $20,300.
o Monthly depreciation is $20,000.
o Ignore taxes.
Balance Sheet
October 31
Assets
Cash $27,000
Accounts receivable, net of 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
The difference between cash receipts and cash disbursements for December would be:
89. Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store’s
operations follow:
o Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000 for January.
o Collections are expected to be 80% in the month of sale, 19% in the month following the sale, and
1% uncollectible.
o The cost of goods sold is 65% of sales.
o 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.
o Other monthly expenses to be paid in cash are $20,300.
o Monthly depreciation is $20,000.
o Ignore taxes.
Balance Sheet
October 31
Assets
Cash $27,000
Accounts receivable, net of 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
The net income for December would be:
90. Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store’s
operations follow:
o Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000 for January.
o Collections are expected to be 80% in the month of sale, 19% in the month following the sale, and
1% uncollectible.
o The cost of goods sold is 65% of sales.
o 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.
o Other monthly expenses to be paid in cash are $20,300.
o Monthly depreciation is $20,000.
o Ignore taxes.
Balance Sheet
October 31
Assets
Cash $27,000
Accounts receivable, net of 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
The cash balance at the end of December would be:
91. Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store’s
operations follow:
o Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000 for January.
o Collections are expected to be 80% in the month of sale, 19% in the month following the sale, and
1% uncollectible.
o The cost of goods sold is 65% of sales.
o 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.
o Other monthly expenses to be paid in cash are $20,300.
o Monthly depreciation is $20,000.
o Ignore taxes.
Balance Sheet
October 31
Assets
Cash $27,000
Accounts receivable, net of 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
The accounts receivable balance, net of uncollectible accounts, at the end of December would be:
92. Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store’s
operations follow:
o Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000 for January.
o Collections are expected to be 80% in the month of sale, 19% in the month following the sale, and
1% uncollectible.
o The cost of goods sold is 65% of sales.
o 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.
o Other monthly expenses to be paid in cash are $20,300.
o Monthly depreciation is $20,000.
o Ignore taxes.
Balance Sheet
October 31
Assets
Cash $27,000
Accounts receivable, net of 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
Accounts payable at the end of December would be:
93. Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store’s
operations follow:
o Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000 for January.
o Collections are expected to be 80% in the month of sale, 19% in the month following the sale, and
1% uncollectible.
o The cost of goods sold is 65% of sales.
o 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.
o Other monthly expenses to be paid in cash are $20,300.
o Monthly depreciation is $20,000.
o Ignore taxes.
Balance Sheet
October 31
Assets
Cash $27,000
Accounts receivable, net of 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
Retained earnings at the end of December would be:
94. The following are budgeted data for the Bingham Corporation, a merchandising company:
Budgeted Sales (at retail):
January $300,000
February $340,000
March $400,000
April $350,000
Cost of goods sold as a percentage of sales 60%
Desired ending inventory 75% of next month sales
Assuming that the Bingham Corporation had inventory on hand of $70,000 (at cost) on January 1,
the purchases for January (at cost) would be:
95. The following are budgeted data for the Bingham Corporation, a merchandising company:
Budgeted Sales (at retail):
January $300,000
February $340,000
March $400,000
April $350,000
Cost of goods sold as a percentage of sales 60%
Desired ending inventory 75% of next month sales
The desired ending inventory (at cost) for February would be:
96. The following are budgeted data for the Bingham Corporation, a merchandising company:
Budgeted Sales (at retail):
January $300,000
February $340,000
March $400,000
April $350,000
Cost of goods sold as a percentage of sales 60%
Desired ending inventory 75% of next month sales
Assume that all purchases are paid for in the month following the month of purchase. The cash
disbursements for purchases that would appear in the April cash budget would be:
97. Harris Inc., has budgeted sales in units for the next five months as follows:
June 9,400 units
July 7,800 units
August 7,300 units
September 5,400 units
October 4,100 units
Past experience has shown that the ending inventory for each month should be equal to 20% of the
next month’s sales in units. The inventory on May 31 contained 1,880 units. The company needs to
prepare a production budget for the next five months.
The beginning inventory for September should be:
98. Harris Inc., has budgeted sales in units for the next five months as follows:
June 9,400 units
July 7,800 units
August 7,300 units
September 5,400 units
October 4,100 units
Past experience has shown that the ending inventory for each month should be equal to 20% of the
next month’s sales in units. The inventory on May 31 contained 1,880 units. The company needs to
prepare a production budget for the next five months.
The total number of units produced in July should be:
99. May Corporation, a merchandising firm, has budgeted sales as follows for the third quarter of
the year:
July $80,000
August $90,000
September $70,000
Cost of goods sold is equal to 65% of sales. The company wants to maintain a monthly ending
inventory equal to 130% of the Cost of Goods Sold for the following month. The inventory on June 30
is less than this ideal since it is only $65,000. The company is now preparing a Merchandise
Purchases Budget.
The desired beginning inventory for September is:
100. May Corporation, a merchandising firm, has budgeted sales as follows for the third quarter of
the year:
July $80,000
August $90,000
September $70,000
Cost of goods sold is equal to 65% of sales. The company wants to maintain a monthly ending
inventory equal to 130% of the Cost of Goods Sold for the following month. The inventory on June 30
is less than this ideal since it is only $65,000. The company is now preparing a Merchandise
Purchases Budget.
The budgeted purchases for July are:
101. Noel Enterprises has budgeted sales in units for the next five months as follows:
June 6,800 units
July 5,400 units
August 7,200 units
September 4,600 units
October 3,800 units
Past experience has shown that the ending inventory for each month must be equal to 10% of the
next month’s sales in units. The inventory on May 31 contained 400 units. The company needs to
prepare a production budget for the second quarter of the year.
The beginning inventory in units for September is:
102. Noel Enterprises has budgeted sales in units for the next five months as follows:
June 6,800 units
July 5,400 units
August 7,200 units
September 4,600 units
October 3,800 units
Past experience has shown that the ending inventory for each month must be equal to 10% of the
next month’s sales in units. The inventory on May 31 contained 400 units. The company needs to
prepare a production budget for the second quarter of the year.
The total number of units to be produced in July is: