Question

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

Sales are budgeted at $230,000 for November, $210,000 for December, and $200,000 for January.

Collections are expected to be 40% in the month of sale and 60% in the month following the sale.

The cost of goods sold is 65% of sales.

The company would like 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 $22,900.

Monthly depreciation is $13,900.

Ignore taxes.

Balance Sheet October 31
Assets
Cash	$	22,300
Accounts receivable		72,300
Merchandise inventory		82,225
Property, plant and equipment, net of $574,300 accumulated depreciation		1,096,300
Total assets	$	1,273,125
Liabilities and Stockholders' Equity
Accounts payable	$	256,300
Common stock		822,300
Retained earnings		194,525
Total liabilities and stockholders' equity	$	1,273,125

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

Multiple Choice

$56,750

$42,563

$29,225

$98,100

Answer 1

	November	December	January
sales	230000	210000	200000
cost of goods sold-65% of next month sale		130000
Cash collection:
40% in the month of sales	92000	84000	80000
60% in the month following sales		138000
total cash collection		222000
payment to supplier		142350
cash expense		22900
total cash disbursed		165250
difference between cash receipts and cash disbursement		56750
	November	december	January
cogs -65% of sales	149500	136500	130000
ending inventory = 55% of next month sales	75075	71500
beginning inventory	82225	75075
Purchase = total inventory available-opening inventory	142350	132925
total inventory available during the year = ending inventory+ cost of goods sold	224575	208000
ending inventory	75075	71500
cost of goods sold	149500	136500