Question

49.

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 Sheet
October 31
Assets
Cash	$ 19,000
Accounts receivable	77,000
Inventory	157,500
Property, plant and equipment, net of $502,000 accumulated depreciation	1,002,000
Total assets	$ 1,255,500
Liabilities and Stockholders’ Equity
Accounts payable	$ 272,000
Common stock	780,000
Retained earnings	203,500
Total liabilities and stockholders’ equity	$ 1,255,500

The cash balance at the end of December would be:

Multiple Choice

• $19,000

• $163,600

• $61,300

• $137,600

48.

The Bandeiras Corporation, a merchandising firm, has budgeted its activity for December according to the following information:

• Sales at $550,000, all for cash.
• Merchandise inventory on November 30 was $300,000.
• The cash balance at December 1 was $25,000.
• Selling and administrative expenses are budgeted at $60,000 for December and are paid in cash.
• Budgeted depreciation for December is $35,000.
• The planned merchandise inventory on December 31 is $270,000.
• The cost of goods sold is 75% of the sales price.
• All purchases are paid for in cash.
• There is no interest expense or income tax expense.

The budgeted net income for December is:

Multiple Choice

• $107,500

• $137,500

• $42,500

• $77,500

46.

Acti Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year:

September	$ 830,000
October	$ 940,000
November	$ 860,000
December	$ 780,000

At Acti, 40% of raw materials purchases are normally paid for in the month of purchase. The remaining 60% is paid for in the month following the purchase.

In Acti's budgeted balance sheet at December 31, at what amount will accounts payable for raw materials be shown?

Multiple Choice

• $780,000

• $564,000

• $468,000

Answer 1