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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 $240,000 for november, $220,000 for december, and $210,000 for january. collections are expected to be 65% in the month of sale and 35% in the month following the sale. the cost of goods sold is 70% 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 $23,000. monthly depreciation is $14,000. ignore taxes. balance sheet october 31 assets cash $ 22,200 accounts receivable 72,200 merchandise inventory 100,800 property, plant and equipment, net of $574,200 accumulated depreciation 1,096,200 total assets $ 1,291,400 liabilities and stockholders' equity accounts payable $ 256,200 common stock 822,200 retained earnings 213,000 total liabilities and stockholders' equity $ 1,291,400 december cash disbursements for merchandise purchases would be:
bramble corporation is a small wholesaler of gourmet food products. data regarding the store's operations follow: sales are budgeted at $240,000 for november, $220,000 for december, and $210,000 for january. collections are expected to be 65% in the month of sale and 35% in the month following the sale. the cost of goods sold is 70% 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 $23,000. monthly depreciation is $14,000. ignore taxes. balance sheet october 31 assets cash $ 22,200 accounts receivable 72,200 merchandise inventory 100,800 property, plant and equipment, net of $574,200 accumulated depreciation 1,096,200 total assets $ 1,291,400 liabilities and stockholders' equity accounts payable $ 256,200 common stock 822,200 retained earnings 213,000 total liabilities and stockholders' equity $ 1,291,400 december cash disbursements for merchandise purchases would be:
Thecash disbursementsfor merchandise purchases in December would be $200,960.To calculate the cash disbursements for merchandise purchases in December, we need to first calculate thecost of goods sold(COGS) for each month, as well as the desired ending inventory for January.November;Sales; $240,000COGS; 70% of sales = 0.7 x $240,000 = $168,000Ending inventory for December; 60% of January's COGS = 0.6 x 70% x $210,000 = $88,200Merchandise purchases; COGS + ending inventory - beginning inventory = $168,000 + $88,200 - $100,800 = $155,400Cash collections; 65% x $240,000 = $156,000 (in November)35% x $240,000 = $84,000 (in December)December;Sales: $220,000COGS; 70% of sales = 0.7 x $220,000 = $154,000Ending inventory for January: 60% of February's COGS = 0.6 x 70% x $210,000 = $88,200Merchandise purchases; COGS + ending inventory - beginning inventory = $154,000 + $88,200 - $88,200 = $154,000Cash collections; 65% x $220,000 = $143,000 (in December)35% x $220,000 = $77,000 (in January)Now we can calculate the cash disbursements for merchandise purchases in December by adding the merchandise purchases for November and December and subtracting the increase inaccounts payable;Cash disbursements = Merchandise purchases in November + Merchandise purchases in December - Increase in accounts payableThe increase in accounts payable is;35% x $155,400 = $54,540 (from November purchases)35% x $154,000 = $53,900 (from December purchases)However,Cash disbursements = $155,400 + $154,000 - $54,540 - $53,900 = $200,960Therefore, thecashdisbursements for merchandise purchases will be $200,960.To know more aboutcash disbursementsherebrainly.com/question/29602755#SPJ4...