ACCOUNTING-Bracken Corporation is a small wholesaler of gourmet food products

QUESTION

Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the store’s operations follow: •Sales are budgeted at $300,000 for November, $310,000 for December, and $310,000 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 65% of sales.•The company would like to maintain ending merchandise inventories equal to 55% 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 $20,700.•Monthly depreciation is $17,900.•Ignore taxes.Balance SheetOctober 31 Assets Cash$51,000 Accounts receivable, net of allowance for uncollectible accounts99,000 Merchandise inventory107,250 Property, plant and equipment, net of $627,000 accumulated depreciation1,285,000 Total assets$1,542,250 Liabilities and Stockholders’ Equity Accounts payable$291,250 Common stock870,000 Retained earnings381,000 Total liabilities and stockholders’ equity$1,542,250 December cash disbursements for merchandise purchases would be:$191,425$198,575$201,500$110,825

ANSWER:

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