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CentralOffice Supplies is a retail store supplying stationary and other office supplies to small and medium businesses

Accounting

CentralOffice Supplies is a retail store supplying stationary and

other office supplies to small and medium businesses. Information about the store's operation is as follows:
·        November sales amounted to $400,000
·        Sales are budgeted at $440,000 for December and $400,000 for January.

-Receipts are expected to be 60 per cent in the month of sale and 38 per cent in the month following the sale. Two per cent of sales are expected to be uncollectable.
-The store's gross margin is 25 per cent of its sales revenue.
-A total of 80 per cent of the merchandise for resale is purchased in the month prior to the month of sale, and 20 per cent 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 $45,200.
-Annual deprecation is $432,000. Central Office Supplies
Balance Sheet 30 November
Assets:
Cash
$44,000
Accounts receivable (net of $7000 allowance for
uncollectable accounts)
$152,000
Inventory
$280,000
Property, plant and equipment (net of $1180000
accumulated depreciation)
$1,724,000
Total assets
$2,200,000
Liabilities and shareholders' equity
Accounts payable
$324,000
Ordinary shares
$1,590,000
Retained earnings
$286,000
Total liabilities and shareholders' equity
$2,200,000

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