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 $400,000 for November, $420,000 for December, and $420,000 for January.

Collections are expected to be 80% in the month of sale, 18% in the month following the sale, and 2% 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.

$1,511,000  

$1,511,000  

  
The difference between cash receipts and cash disbursements in December would be:

$36,425

$136,850

$16,000

$75,850

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

Explanation / Answer

correct option is "D" - 75850

**Cash Receipt : (november sale * .18 )+(December sales *.80)

                     = (400000 *.18 )+(420000 *.80)

                     = 72000 + 336000

                    = 408000

Cash Disbursement :Payment for november purchase+ cash expenses

                            309750 + 22400

                           = 332150

Difference = 408000 - 332150 = 75850

**purchase for november =COGS +ending -beginning

                                 = (400000 *.75 ) + (420000*.75 *.65 ) - 195000

                                  = 309750

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