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

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


• Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000 for January.
• Collections are expected to be 80% in the month of sale, 19% in the month following the sale, and 1% 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 60% 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 $20,300.
• Monthly depreciation is $20,000.
• Ignore taxes.

-Expected cash collections in December are:

A) $230,000
B) $184,000
C) $233,400
D) $49,400

Correct Answer:

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