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

The accounts receivable balance, net of uncollectible accounts, at the end of December would be:

A. $207,900

B. $105,300

C. $117,000

D. $88,700

The cash balance at the end of December would be:

A. $182,400

B. $13,000

C. $114,400

D. $195,400

Retained earnings at the end of December would be:

A. $259,600

B. $445,100

C. $422,000

D. $342,400

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