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 $300,000 for November, $310,000 for December, and $310,000 for January.

Collections are expected to be 80% in the month of sale, 17% in the month following the sale, and 3% uncollectible.

The company would like to maintain ending merchandise inventories equal to 55% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.

$1,542,250  

$1,542,250  

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

$79,725

$7,500

$36,613

$114,325

•

Sales are budgeted at $300,000 for November, $310,000 for December, and $310,000 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 65% of sales. •

The company would like to maintain ending merchandise inventories equal to 55% 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 $20,700. • Monthly depreciation is $17,900. • Ignore taxes.

Explanation / Answer

$79,725 Statement showing computations Particulars November December January Sales      300,000.00         310,000.00         310,000.00 Cost of goods sold @65%      195,000.00         201,500.00         201,500.00 Ending inventory =55% of next month COGS      110,825.00         110,825.00 Beginning inventory = Ending Inv of previous month      107,250.00         110,825.00         110,825.00 Inventory Purchased = COGS+Ending - Beginning      198,575.00         201,500.00 Collection for sale in same month @80%   a      240,000.00         248,000.00         248,000.00 Collection for sale in next month @17%   b           51,000.00            52,700.00 Payment in next month c         198,575.00         201,500.00 Monthly Expenses d        20,700.00           20,700.00            20,700.00 Cash Receipts - Cash Disbursements = a+b-c-d      219,300.00           79,725.00            78,500.00

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