Carver Lumber sells lumber and general building supplies to building contractors in a medium-sized town...
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Accounting
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 $352,000 for November, $322,000 for December, and $302,000 for January.
Collections are expected to be 90% in the month of sale and 10% in the month following the sale.
The cost of goods sold is 70% of sales.
The company desires to have an ending merchandise inventory equal to 50% of the following 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 $24,900.
Monthly depreciation is $16,400.
Ignore taxes.
Balance Sheet
October 31
Assets
Cash
$ 19,600
Accounts receivable
77,400
Inventory
123,200
Property, plant and equipment, net of $503,000 accumulated depreciation
1,004,000
Total assets
$ 1,224,200
Liabilities and Stockholders Equity
Accounts payable
$ 273,000
Common stock
782,000
Retained earnings
169,200
Total liabilities and stockholders equity
$ 1,224,200
The net income for December would be:
Multiple Choice
$55,300
$58,500
$47,280
$71,700
Answer & Explanation
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