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    Carver Lumber: cash balance at the end of December would be?

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    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 $450,000 for November, $380,000 for December, and $280,000 for January.
    - Collections are expected to be 87% in the month of sale, 8% in the month following the sale, and 5% uncollectible.
    - The cost of goods sold is 69% of sales.
    - The company purchases 60% of its merchandise in the month prior to the month of sale and 40% in the month of sale. Payment for merchandise is made in the month following the purchase.
    - Other monthly expenses to be paid in cash are $14,700.
    - Monthly depreciation is $10,000.
    - Ignore taxes.

    Statement of Financial Position
    October 31
    Assets:
    Cash $ 15,000
    Accounts receivable (net of allowance for uncollectible accounts) 85,000
    Inventory 157,500
    Property, plant and equipment (net of $512,000 accumulated depreciation) 1,012,000
    Total assets $1,269,500

    Liabilities and Stockholders' Equity:
    Accounts payable $ 262,000
    Common stock 680,000
    Retained earnings 327,500
    Total liabilities and stockholders' equity $1,007,500

    The cash balance at the end of December would be:

    $461,880

    $245,800

    $284,800

    $285,180

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    https://brainmass.com/business/accounting/207700

    Attachments

    Solution Preview

    See Excel file attached.

    Carver Lumber
    Cash Projection
    12/31/2008 October November December Totals

    Cash balance 15,000 15,000

    October sales collections 85,000 ...

    Solution Summary

    The solution provides a detail accounting for how to come to a projected cash balance at the end of December. It is summarized in an Excel spreadsheet.

    $2.19

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