Ref4

Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the store's
operations follow:

o Sales are budgeted at $330,000 for November, $340,000 for December, and $340,000 for January.
o Collections are expected to be 80% in the month of sale, 17% in the month following the sale, and
3% uncollectible.
o The cost of goods sold is 75% of sales.
o The company would like to maintain ending merchandise inventories 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 $21,800.
o Monthly depreciation is $19,000.
o Ignore taxes.

Balance Sheet
October 31
Assets
Cash..................................................................................................................... $ 28,000
Accounts receivable, net of allowance for uncollectible accounts........................ 76,000
Merchandise inventory......................................................................................... 173,250
Property, plant and equipment, net of $604,000 accumulated depreciation......... 1,170,000
Total assets.......................................................................................................... $1,447,250

Liabilities and Stockholders' Equity

Accounts payable................................................................................................. $ 255,000
Common stock..................................................................................................... 840,000
Retained earnings................................................................................................ 352,250
Total liabilities and stockholders' equity............................................................... $1,447,250

81. What are expected cash collections in December?

82. What would the cost of December merchandise purchases be?
83. What are December cash disbursements for merchandise purchases?
84. What would the difference between cash receipts and cash disbursements for December be?
Ref28
Carter Lumber sells lumber and general building supplies to building contractors in a medium-sized
town in Montana. Data regarding the store's operations follow:

o Sales are budgeted at $380,000 for November, $390,000 for December, and $400,000 for January.
o Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and
3% uncollectible.
o The cost of goods sold is 65% of sales.
o The company desires to have an ending merchandise inventory equal to 80% of the following
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 $22,000.
o Monthly depreciation is $20,000.
o Ignore taxes.

Balance Sheet
October 31
Assets
Cash..................................................................................................................... $ 13,000
Accounts receivable, net of allowance for uncollectible accounts........................ 77,000
Inventory.............................................................................................................. 197,600
Property, plant and equipment, net of $502,000 accumulated depreciation......... 992,000
Total assets.......................................................................................................... $1,279,600

Liabilities and Stockholders' Equity

Accounts payable................................................................................................. $ 240,000
Common stock..................................................................................................... 780,000
Retained earnings................................................................................................ 259,600
Total liabilities and stockholders' equity............................................................... $1,279,600

149. What would the net income for December be?

150. What would the cash balance at the end of December be?
151. Compute the accounts receivable balance, net of uncollectible accounts, at the end of December
152. Compute the accounts payable at the end of December
153. Compute the retained earnings at the end of December