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 $240,000 for November, $250,000 for December, and $250,000 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.

  
The cost of December merchandise purchases would be: *DETAIL PLEASE*

$49,000

$187,500

$121,875

$97,000

•

Sales are budgeted at $240,000 for November, $250,000 for December, and $250,000 for January.

•

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

• The cost of goods sold is 75% of sales. •

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.

• Other monthly expenses to be paid in cash are $20,900. • Monthly depreciation is $18,100. • Ignore taxes.

Explanation / Answer

$187,500 Statement showing computations Particulars November December January Sales      240,000.00         250,000.00         250,000.00 Cost of goods sold @75%      180,000.00         187,500.00         187,500.00 Ending inventory =65% of next month COGS      121,875.00         121,875.00 Beginning inventory = Ending Inv of previous month      117,000.00         121,875.00         121,875.00 Inventory Purchased = COGS+Ending - Beginning      184,875.00         187,500.00

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