Carter Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow: o Sales are budgeted at $380,000 for November, $390,000 for December, and $400,000 for January.
O Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible.
O The cost of goods sold is 65% of sales.
O The company desires to have an ending merchandise inventory equal to 80% of the following 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 $22,000.
O Monthly depreciation is $20,000.
O Ignore taxes. Retained earnings at the end of December would be:
A)$259,600
B)$342,400
C)$422,000
D)$445,100

Question

Carter Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow: o Sales are budgeted at $380,000 for November, $390,000 for December, and $400,000 for January.
O Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible.
O The cost of goods sold is 65% of sales.
O The company desires to have an ending merchandise inventory equal to 80% of the following 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 $22,000.
O Monthly depreciation is $20,000.
O Ignore taxes.  Retained earnings at the end of December would be:
A)$259,600 
B)$342,400 
C)$422,000 
D)$445,100

Quizplus · Accepted Answer

The Answer of Carter Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow: o Sales are budgeted at $380,000 for November, $390,000 for December, and $400,000 for January.
O Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible.
O The cost of goods sold is 65% of sales.
O The company desires to have an ending merchandise inventory equal to 80% of the following 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 $22,000.
O Monthly depreciation is $20,000.
O Ignore taxes.  Retained earnings at the end of December would be:
A)$259,600 
B)$342,400 
C)$422,000 
D)$445,100

Carter Lumber Sells Lumber and General Building Supplies to Building