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 $350,000 for November, $320,000 for December, and $300,000 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 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 $24,700. •Monthly depreciation is $16,000. •Ignore taxes. Balance SheetOctober 31AssetsCash$19,000Accounts
receivable 77,000Inventory 157,500Property, plant and equipment, net of $502,000 accumulated depreciation 1,002,000Total assets$ 1,255,500Liabilities and Stockholders' EquityAccounts payable$272,000Common stock 780,000Retained earnings 203,500Total liabilities and stockholders' equity$ 1,255,500The net income for December would be:
A. $42,300
B. $32,900
C. $39,300
D. $55,300
Answer: C
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