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

question 42

Multiple Choice

Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

• Sales are budgeted at $220,000 for November, $200,000 for December, and $210,000 for January.
• Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible.
• The cost of goods sold is 65% of sales.
• The company desires to have an ending merchandise inventory at the end of each month equal to 50% 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 $22,500.
• Monthly depreciation is $19,000.
• Ignore taxes.

-The cost of December merchandise purchases would be:

• A)$133,250
• B)$68,250
• C)$130,000
• D)$143,000