14. Brarin Corporation is a small wholesaler of gourmet food products. Data rega

Question

14.

Brarin Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:

Sales are budgeted at $350,000 for November, $370,000 for December, and $360,000 for January.

Collections are expected to be 45% in the month of sale, 53% in the month following the sale, and 2% uncollectible.

The company would like to maintain ending merchandise inventories equal to 80% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.

  
December cash disbursements for merchandise purchases would be:

$274,500

$216,000

$277,500

$271,500

Brarin Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:

Explanation / Answer

Brarin Corporation November December January A Sales $ 3,50,000 $           3,70,000 $           3,60,000 B Cost of Goods sold (75% of sales) $ 2,62,500 $           2,77,500 $           2,70,000 C Ending Inventory (80% of next months CGS) $ 2,22,000 $           2,16,000 D Beginning Inventory $ 2,10,000 $           2,22,000 $           2,16,000 E Purchases ( B + C - D) $ 2,74,500 $           2,71,500 F Payment for purchase (paid in next month) $           2,74,500 $           2,71,500 Answer December cash disbursements for merchandise purchase would be $ 274,500 Note: Closing inventory of October will be 80 % of the cost of goods sold in the month of november.

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