Bracken Corporation is a small wholesaler of gourmet food products. Data regardi

Question

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

Sales are budgeted at $260,000 for November, $270,000 for December, and $270,000 for January.

Collections are expected to be 70% in the month of sale, 29% in the month following the sale, and 1% uncollectible.

The company would like to maintain ending merchandise inventories equal to 65% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.

$1,533,750  

$1,533,750  

  
December cash disbursements for merchandise purchases would be:

$131,625

$202,500

$199,875

$190,125

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

Explanation / Answer

$ 199875 , December cash disbursements for merchandise purchases.

Particular November Month

   Cost of goods sold(75% * 260000) $ 195000

Add: Ending Inventory (65% * 202500)    $ 131625

$ 326625

Less:   Opening Stock(as mentioned in Balance sheet of october closing stock) $ 126750

Purchase of merchandise to be paid in December month       $ 199875

Note: ending inventory = 65% * { 75% * $270000}

= 65% * $202500

= $131625

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