Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

• Sales are budgeted at $220,000 for November, $200,000 for December, and $210,000 for January.
• Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible.
• The cost of goods sold is 65% of sales.
• The company desires to have an ending merchandise inventory at the end of each month equal to 50% of the next 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 $22,500.
• Monthly depreciation is $19,000.
• Ignore taxes.

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

Question

Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

• Sales are budgeted at $220,000 for November, $200,000 for December, and $210,000 for January.
• Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible.
• The cost of goods sold is 65% of sales.
• The company desires to have an ending merchandise inventory at the end of each month equal to 50% of the next 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 $22,500.
• Monthly depreciation is $19,000.
• Ignore taxes.

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

Quizplus · Accepted Answer

Cash collections for December:
 11eaa48f_7b7c_b44a_9e4a_d159e3b50bd1_TB2485_00 Cash disbursements for merchandise in December:
 11eaa48f_7b7c_b44b_9e4a_61b13dc7f35d_TB2485_00 The company pays for its purchases in the month following purchase,so the cash disbursements in December for merchandise would equal the November purchases of $136,500.
Total cash disbursements in December:
 11eaa48f_7b7c_db5c_9e4a_a9714c4b0ffc_TB2485_00

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