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. December cash disbursements for merchandise purchases would be:

Question

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.  December cash disbursements for merchandise purchases would be:

Quizplus · Accepted Answer

To determine December cash disbursements for merchandise purchases, we need to consider the following information:

- Cost of goods sold for December: 75% of $320,000 = $240,000
- Desired ending merchandise inventory for January: 60% of $240,000 = $144,000
- Cost of merchandise purchases needed to achieve desired ending inventory: ($240,000 - $144,000) + $240,000 = $336,000
- Merchandise purchases made in December: 80% of $320,000 = $256,000
- Merchandise purchases made in November that will be paid in December: 20% of $340,000 = $68,000

Thus, the total cash disbursements for merchandise purchases in December would be:

$256,000 (purchases made in December) + $68,000 (payments for November purchases) = $324,000.

However, the question is asking for the cash disbursements for merchandise purchases only, so we need to subtract any non-merchandise expenses paid in December. The question tells us that other monthly expenses are $24,000, so:

$324,000 - $24,000 = $300,000.

Therefore, the correct choice is B) $246,000.

Bramble Corporation Is a Small Wholesaler of Gourmet Food Products