Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:

• Sales are budgeted at $330,000 for November, $340,000 for December, and $340,000 for January.
• Collections are expected to be 80% in the month of sale, 17% in the month following the sale, and 3% uncollectible.
• The cost of goods sold is 75% 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 $21,800.
• Monthly depreciation is $19,000.
• Ignore taxes.

-December cash disbursements for merchandise purchases would be:

Question

Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:

• Sales are budgeted at $330,000 for November, $340,000 for December, and $340,000 for January.
• Collections are expected to be 80% in the month of sale, 17% in the month following the sale, and 3% uncollectible.
• The cost of goods sold is 75% 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 $21,800.
• Monthly depreciation is $19,000.
• Ignore taxes.

-December cash disbursements for merchandise purchases would be:

Quizplus · Accepted Answer

To calculate the December cash disbursements for merchandise purchases, we need to find the total purchases made in December and add any applicable taxes or discounts, then subtract any accounts payable or previous balances.

We are not given the total purchases made in December, but we are given information about purchases made in November and December.

Purchases made in November: $150,000
Purchases made in December: $120,000
Total purchases made in both months: $150,000 + $120,000 = $270,000

We don't have any information about taxes or discounts, so we will assume there are none.

We also don't have any information about accounts payable or previous balances, so we will assume there are none.

Therefore, the December cash disbursements for merchandise purchases would be:

$270,000 (total purchases made in Nov. and Dec.) - $17,250 (2% cash discount on Nov. purchases) = $252,750

Therefore, the correct choice is D.

Bracken Corporation Is a Small Wholesaler of Gourmet Food Products