#1.

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

	Sales are budgeted at $450,000 for November, $460,000 for December, and $460,000 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 55% of sales.
	The company would like to maintain ending merchandise inventories equal to 45% 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 $20,500.
	Monthly depreciation is $17,700.
	Ignore taxes.

Balance Sheet
October 31
Assets
Cash	$53,000
Accounts receivable, net of allowance for uncollectible accounts	101,000
Merchandise inventory	111,375
Property, plant and equipment, net of $629,000 accumulated depreciation	1,295,000
Total assets	$1,560,375
Liabilities and Stockholders' Equity
Accounts payable	$286,875
Common stock	890,000
Retained earnings	383,500
Total liabilities and stockholders' equity	$1,560,375

The cost of December merchandise purchases would be:

A. $101,000

B. $113,850

C. $53,000

D. $253,000