Dilly Farm Supply Is Located in a Small Town in the Rural

question 165

Multiple Choice

Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:
o Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for January.
o Collections are expected to be 65% in the month of sale and 35% in the month following the sale.
o The cost of goods sold is 80% of sales.
o 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.
o Other monthly expenses to be paid in cash are $21,100.
o Monthly depreciation is $21,000.
o Ignore taxes.

-The net income for December would be:

• A) $19,900
• B) $38,700
• C) $40,900
• D) $13,700

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Definitions:

Footnotes

Notes at the bottom of financial statements that provide additional details and clarifications about the financial data presented, offering insights into accounting policies and specific line items.

Cash Control

Includes the methods and procedures that are implemented to monitor, manage, and protect the company's cash transactions and balances.

Safeguarding Cash

Implementing measures and controls to protect cash assets from theft, fraud, or misuse.

Contractual Restrictions

Limitations placed on transactions, operations, or activities that are outlined in a legal contract between parties.