Question
Brarin Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: Sales are budgeted at $350,000 for November, $370,000 for
Brarin Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: Sales are budgeted at $350,000 for November, $370,000 for December, and $360,000 for January. Collections are expected to be 45% in the month of sale, 53% in the month following the sale, and 2% uncollectible. The cost of goods sold is 75% of sales. The company would like to maintain ending merchandise inventories equal to 80% 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 $21,100. Ignore taxes. The cost of December merchandise purchases would be: $262,500 $216,000 $271,500 or $277,500?
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