Question

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

• Sales are budgeted at $260,000 for November, $240,000 for December, and $230,000 for January.
• Collections are expected to be 55% in the month of sale and 45% in the month following the sale.
• The cost of goods sold is 80% of sales.
• The company would like to maintain ending merchandise inventories equal to 70% 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 $23,200.
• Monthly depreciation is $14,200.
• Ignore taxes.

Balance Sheet October 31
Assets
Cash	$	22,000
Accounts receivable		72,000
Merchandise inventory		145,600
Property, plant and equipment, net of $574,000 accumulated depreciation		1,096,000
Total assets	$	1,335,600
Liabilities and Stockholders' Equity
Accounts payable	$	256,000
Common stock		822,000
Retained earnings		257,600
Total liabilities and stockholders' equity	$	1,335,600

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

Answer 1

The difference between cash receipts and cash disbursements for December would be:
	December
Cash Receipts
- Collection from sales	$249,000.00
Less : Cash payments
- Merchandise Inventory Purchase	$196,800.00
- Other monthly expense	$23,200.00
Total Cash Payments	$220,000.00
Difference	$29,000.00
Working
Schedule for Collection from sales
	November	December
Beginning Accounts receivable	$72,000.00
November sales collection	$143,000.00	$117,000.00
December sales colllection		$132,000.00
Collection from sales	$215,000.00	$249,000.00
Schedule for Merchandise inventory purchases
	November	December
Sales	$260,000.00	$240,000.00
Cost of goods sold (80% of sales)	$208,000.00	$192,000.00
Add : Ending Inventory	$134,400.00	$128,800.00
Less : Beginning Inventory	$145,600.00	$134,400.00
Merchandise Inventory Purchases	$196,800.00	$186,400.00