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Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: Sales are budgeted at $340,000 for November, $320,000 for
Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:
- Sales are budgeted at $340,000 for November, $320,000 for December, and $310,000 for January.
- Collections are expected to be 80% in the month of sale and 20% in the month following the sale.
- The cost of goods sold is 75% 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 $24,000.
- Monthly depreciation is $15,000.
- Ignore taxes.
Balance Sheet | |
October 31 | |
Assets | |
---|---|
Cash | $ 20,000 |
Accounts receivable | 70,000 |
Merchandise inventory | 153,000 |
Property, plant and equipment, net of $572,000 accumulated depreciation | 1,094,000 |
Total assets | $ 1,337,000 |
Liabilities and Stockholders' Equity | |
Accounts payable | $ 254,000 |
Common stock | 820,000 |
Retained earnings | 263,000 |
Total liabilities and stockholders' equity | $ 1,337,000 |
The cost of December merchandise purchases would be:
a.) $255,000
b.) $139,500
c.) $235,500
d.) $240,000
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