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 $359,000 for November, $329,000 for December, and $309,000 for January.
Collections are expected to be 80% in the month of sale and 20% in the month following the sale.
The cost of goods sold is 75% of sales.
The company desires to have an ending merchandise inventory equal to 60% 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 $25,600.
Monthly depreciation is $17,800.
Ignore taxes.
Balance SheetOctober 31AssetsCash$21,700?Accounts receivable 78,800?Inventory 161,550?Property, plant and equipment, net of $506,500 accumulated depreciation 1,011,000?Total assets$1,273,050?Liabilities and Stockholders' EquityAccounts payable$276,500?Common stock 789,000?Retained earnings 207,550?Total liabilities and stockholders' equity$1,273,050??The net income for December would be:
A. $56,650
B. $38,850
C. $42,750
D. $32,405
Answer: B
You might also like to view...
With few exceptions, all subsidiaries in which the parent company owns a controlling interest (more than 50 percent) must be consolidated with the parent company for financial reporting purposes
Indicate whether the statement is true or false
The difference between direct and indirect exporting is that indirect exporting involves ________
A) higher risks B) self-handling of exports C) greater returns D) more product alterations E) less investment
Cavallo Company acquired a tract of land containing an extractable natural resource. Cavallo is required by the purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 2,500,000 tons and that the extraction will be completed in five years. Relevant cost
information follows: Land ................................................. $9,000,000 Exploration and development costs .................... $1,000,000 Expected cash flows for restoration costs ............ $1,500,000 Credit-adjusted risk free interest rate .............. 10% What should be the depletion charge per ton of extracted material? a. $4.00 b. $4.37 c. $3.97 d. $3.60
Stock X has a beta of 0.6, while Stock Y has a beta of 1.4. Which of the following statements is CORRECT?
A. Stock Y must have a higher expected return and a higher standard deviation than Stock X. B. If expected inflation increases but the market risk premium is unchanged, then the required return on both stocks will fall by the same amount. C. If the market risk premium declines but expected inflation is unchanged, the required return on both stocks will decrease, but the decrease will be greater for Stock Y. D. If expected inflation declines but the market risk premium is unchanged, then the required return on both stocks will decrease but the decrease will be greater for Stock Y. E. A portfolio consisting of $50,000 invested in Stock X and $50,000 invested in Stock Y will have a required return that exceeds that of the overall market.