Bracken Corporation is a small wholesaler of gourmet food products. Data regardi
ID: 2467437 • Letter: B
Question
Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:
Sales are budgeted at $310,000 for November, $320,000 for December, and $320,000 for January.
Collections are expected to be 75% in the month of sale, 24% in the month following the sale, and 1% uncollectible.
The company would like to 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.
$1,558,200
$1,558,200
December cash disbursements for merchandise purchases would be: *DETAIL PLEASE*
$212,800
$221,200
$224,000
$134,400
•Sales are budgeted at $310,000 for November, $320,000 for December, and $320,000 for January.
•Collections are expected to be 75% in the month of sale, 24% in the month following the sale, and 1% uncollectible.
• The cost of goods sold is 70% of sales. •The company would like to 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 $20,800. • Monthly depreciation is $18,000. • Ignore taxes.Explanation / Answer
Answer. b. $221,200 Calculation of cash disbursement for Mecrchandise Purchases in M/o December Nov Dec Jan Budgeted Sales 310,000 320,000 320,000 Cost of Goods Sold (70% of Sales) 217,000 224,000 224,000 Add: Closing Stock 134,400 134,400 Dec - $224000 (Jan COGS) X 60% Nov - $224000 (Dec COGS) X 60% Total Needs 351,400 358,400 Less: Opening Stock (192,000) Dec -- $224000 (Dec COGS) X 60% (130,200) Nov - $217000 (NOV COGS) X 60% Total Purchases of Merchandise 221,200 166,400 Payment of merchandise Inventory 221,200
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