Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:•Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for January. •Collections are expected to be 65% in the month of sale and 35% in the month following the sale. •The cost of goods sold is 80% of sales. •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. •Other monthly expenses to be paid in cash are $21,100. •Monthly depreciation is $21,000. •Ignore taxes. Balance SheetOctober 31Assets Cash$25,000Accounts receivable 77,000Merchandise inventory 162,400Property, plant

Question

and equipment, net of $624,000 accumulated depreciation 1,026,000Total assets$1,290,400   Liabilities and Stockholders' Equity  Accounts payable$239,000Common stock 740,000Retained earnings 311,400Total liabilities and stockholders' equity$1,290,400?The cost of December merchandise purchases would be:

A. $248,000
B. $117,600
C. $232,000
D. $192,000

Answer 1

Answer: D