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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 $410,000 for November, $390,000 for
Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:
- Sales are budgeted at $410,000 for November, $390,000 for December, and $380,000 for January.
- Collections are expected to be 50% in the month of sale and 50% 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 $24,700.
- Monthly depreciation is $15,700.
- Ignore taxes.
Balance Sheet | |||||
October 31 | |||||
Assets | |||||
---|---|---|---|---|---|
Cash | $ 20,700 | ||||
Accounts receivable | 70,700 | ||||
Merchandise inventory | 229,600 | ||||
Property, plant and equipment, net of $572,700 accumulated depreciation | 1,094,700 | ||||
Total assets | $ 1,415,700 | ||||
Liabilities and Stockholders' Equity | |||||
Accounts payable | $ 254,700 | ||||
Common stock | 820,700 | ||||
Retained earnings | 340,300 | ||||
Total liabilities and stockholders' equity | $ 1,415,700 |
The cost of December merchandise purchases would be:
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