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Carver Lumber sells lumber and general building supplies to building contractors in a medium-sized town...

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Accounting

Carver Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow:

  • Sales are budgeted at $352,000 for November, $322,000 for December, and $302,000 for January.
  • Collections are expected to be 90% in the month of sale and 10% in the month following the sale.
  • The cost of goods sold is 70% of sales.
  • The company desires to have an ending merchandise inventory equal to 50% of the following 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 $24,900.
  • Monthly depreciation is $16,400.
  • Ignore taxes.

Balance Sheet
October 31
Assets
Cash $ 19,600
Accounts receivable 77,400
Inventory 123,200
Property, plant and equipment, net of $503,000 accumulated depreciation 1,004,000
Total assets $ 1,224,200
Liabilities and Stockholders Equity
Accounts payable $ 273,000
Common stock 782,000
Retained earnings 169,200
Total liabilities and stockholders equity $ 1,224,200

The net income for December would be:

Multiple Choice

  • $55,300

  • $58,500

  • $47,280

  • $71,700

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