Handy Hardware is a retail hardware store. Information about the store's operations follows November 20x1 sales amounted to $500,000 Sales are budgeted at $540,000 for December 20x1 and $500,000 for January 20x2 Collections are expected to be 60 percent in the month of sale and 38 percent in the month following the sale. Two percent of sales are expected to be uncollectible. Bad debts expense is recognized monthly The store's gross margin is 20 percent of its sales revenue A total of 80 percent of the merchandise for resale is purchased in the month prior to the month of sale, and 20 percent is purchased in the month of sale. Payment for merchandise is made in the month following the purchase Other monthly expenses paid in cash amount to $46,200 Annual depreciation is $462,000 The company's balance sheet as of November 30, 20x1, is as follows HANDY HARDWARE, INC. Balance Sheet November 30, 20x1 Assets $ 54,000 Cash Accounts receivable (net of $8,000 allowance for uncollectible accounts) Inventory Property, plant, and equipment 162,000 380,000 (net of $1,280,000 accumulated depreciation) Total assets 1,824,000 2,420,000 Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and owner's equity $ 425,600 1,690,000 304,400 $2,420,000