Handy Hardware is a retail hardware store. Information about the store's operations follows. November 20x1...

 

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Handy Hardware is a retail hardware store. Information about the store's operations follows. • November 20x1 sales amounted to $580,000. Sales are budgeted at $620,000 for December 20x1 and $580,000 for January 20x2. Collections are expected to be 60 percent in the month of sale and 38 percent in the month following the sale. Two percent of sales are expected to be uncollectible. Bad debts expense is recognized monthly. The store's gross margin is 20 percent of its sales revenue. A total of 80 percent of the merchandise for resale is purchased in the month prior to the month of sale, and 20 percent is purchased in the month of sale. Payment for merchandise is made in the month following the purchase. Other monthly expenses paid in cash amount to $47,000. Annual depreciation is $486,000. The company's balance sheet as of November 30, 20x1, is as follows: HANDY HARDWARE, INC. Balance Sheet November 30, 20x1 Assets Cash Accounts receivable (net of $8,880 allowance for uncollectible accounts) Inventory Property, plant, and equipment (net of $1,360,000 accumulated depreciation) Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and owner's equity $ 62,000 170,000 460,000 1,904,000 $2,596,000 $ 489,600 1,770,000 336,400 $2,596,000 Required: 1. Compute the budgeted cash collections for December 20x1. 2. Compute the budgeted income (loss) before income taxes for December 20x1. 3. Compute the projected balance in accounts payable on December 31, 20x1. Complete this question by entering your answers in the tabs below. Handy Hardware is a retail hardware store. Information about the store's operations follows. • November 20x1 sales amounted to $580,000. Sales are budgeted at $620,000 for December 20x1 and $580,000 for January 20x2. Collections are expected to be 60 percent in the month of sale and 38 percent in the month following the sale. Two percent of sales are expected to be uncollectible. Bad debts expense is recognized monthly. The store's gross margin is 20 percent of its sales revenue. A total of 80 percent of the merchandise for resale is purchased in the month prior to the month of sale, and 20 percent is purchased in the month of sale. Payment for merchandise is made in the month following the purchase. Other monthly expenses paid in cash amount to $47,000. Annual depreciation is $486,000. The company's balance sheet as of November 30, 20x1, is as follows: HANDY HARDWARE, INC. Balance Sheet November 30, 20x1 Assets Cash Accounts receivable (net of $8,880 allowance for uncollectible accounts) Inventory Property, plant, and equipment (net of $1,360,000 accumulated depreciation) Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and owner's equity $ 62,000 170,000 460,000 1,904,000 $2,596,000 $ 489,600 1,770,000 336,400 $2,596,000 Required: 1. Compute the budgeted cash collections for December 20x1. 2. Compute the budgeted income (loss) before income taxes for December 20x1. 3. Compute the projected balance in accounts payable on December 31, 20x1. Complete this question by entering your answers in the tabs below.

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