Bracken Corporation is a small wholesaler of gourmet food products. Data regardi
ID: 2416061 • Letter: B
Question
Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:
• Sales are budgeted at $330,000 for November, $340,000 for December, and $340,000 for January.
• Collections are expected to be 80% in the month of sale, 17% in the month following the sale, and 3% uncollectible.
• The cost of goods sold is 75% of sales.
• The company would like to maintain ending merchandise inventories equal to 70% 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 $21,800.
The difference between cash receipts and cash disbursements for December would be:
A) $53,550
B) $19,550
C) $34,000
D) $87,550
Explanation / Answer
A) $53,550 Statement showing computations Particulars Nov Dec Jan Sales 330,000.00 340,000.00 340,000.00 Collection in same month@80% a 264,000.00 272,000.00 272,000.00 Collection in next month@17% b 56,100.00 57,800.00 COGS @75% 247,500.00 255,000.00 255,000.00 Ending =70% of next month COGS 178,500.00 178,500.00 Beginning = Ending of prev = 247500*.70 173,250.00 178,500.00 Purchases = COGS+Ending -op c 252,750.00 255,000.00 Payments c 252,750.00 Other Monthly Exp d 21,800.00 21,800.00 21,800.00 Net of Cash Receipts and disbursements = a+b-c-d 53,550.00
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