Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: o Sales are budgeted at $330,000 for November, $340,000 for December, and $340,000 for January.
O Collections are expected to be 80% in the month of sale, 17% in the month following the sale, and 3% uncollectible.
O The cost of goods sold is 75% of sales.
O 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.
O Other monthly expenses to be paid in cash are $21,800.
O Monthly depreciation is $19,000.
O Ignore taxes. Expected cash collections in December are:

Question

Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: o Sales are budgeted at $330,000 for November, $340,000 for December, and $340,000 for January.
O Collections are expected to be 80% in the month of sale, 17% in the month following the sale, and 3% uncollectible.
O The cost of goods sold is 75% of sales.
O 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.
O Other monthly expenses to be paid in cash are $21,800.
O Monthly depreciation is $19,000.
O Ignore taxes.  Expected cash collections in December are:

Quizplus · Accepted Answer

To calculate the expected cash collections in December, we need to find the total sales in November, which are collected in December, and the sales made in December, which are collected in December, January, and February. 
Collections in December = (80% of November sales collected in December) + (80% of December sales collected in December) + (17% of November sales collected in January) + (3% of November and December sales are uncollectible) 
Collections in December = (0.8*330,000)+(0.8*340,000)+(0.17*330,000)+(0.03*(330,000+340,000)) 
Collections in December = $328,100 
Therefore, the best choice is B, with the above explanation.

Bracken Corporation Is a Small Wholesaler of Gourmet Food Products