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

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.

-December cash disbursements for merchandise purchases would be:

A) $192,000
B) $243,200
C) $117,600
D) $248,000

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free