Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:
o Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for January.
o Collections are expected to be 65% in the month of sale and 35% in the month following the sale.
o The cost of goods sold is 80% of sales.
o 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.
o Other monthly expenses to be paid in cash are $21,100.
o Monthly depreciation is $21,000.
o Ignore taxes.

-The difference between cash receipts and cash disbursements for December would be:

Question

Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:
o Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for January.
o Collections are expected to be 65% in the month of sale and 35% in the month following the sale.
o The cost of goods sold is 80% of sales.
o 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.
o Other monthly expenses to be paid in cash are $21,100.
o Monthly depreciation is $21,000.
o Ignore taxes.
 
-The difference between cash receipts and cash disbursements for December would be:

Quizplus · Accepted Answer

Cash collections for December:
 11ea7761_17b8_79ac_81a5_45910de66e12_TB2580_00 Cash disbursements for merchandise in December:
 11ea7761_17b8_a0bd_81a5_a563c8d1e78e_TB2580_00 The company pays for its purchases in the month following purchase, so the cash disbursements in December would equal the November purchases of $243,200.
Total cash disbursements in December:
 11ea7761_17b8_a0be_81a5_ad8935fb1c61_TB2580_00 11ea7761_17b8_a0bf_81a5_f596da84e1be_TB2580_00

Dilly Farm Supply Is Located in a Small Town in the Rural