2. Bramble Corporation is a small wholesaler of gourmet food products. Data rega

Question

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

Sales are budgeted at $240,000 for November, $220,000 for December, and $210,000 for January.

Collections are expected to be 65% in the month of sale and 35% in the month following the sale.

The cost of goods sold is 70% of sales.

The company would like maintain ending merchandise inventories equal to 60% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.

Other monthly expenses to be paid in cash are $23,000.

Monthly depreciation is $14,000.

Ignore taxes.

Balance Sheet

October 31

December cash disbursements for merchandise purchases would be:

Thanks!

Balance Sheet

October 31

Asset Cash $22,200 Accounts receivable $72,200 Merchandise inventory $100,800 Property, plant and equipment, net of $574,200 accumulated depreciation $1,096,200 Total asset $1,291,400 Liabilities and Stockholders' Equity Accounts payable $256,200 Common stock $822,200 Retain earnings $213,000 Total liabilities and stockholders' equity $1,291,400

Explanation / Answer

Merchandise purchase:

So cash disbursement for merchandise purchase in December=$159,600

Sales cost of good sold(70% of sales( November 240,000 $168,000 December 220,000 $154,000 January 210,000 $147,000

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