Question

Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: Sales are budgeted at $260,000 for November, $240,000 for December, and $230,000 for January. Collections are expected to be 55% in the month of sale and 45% in the month following the sale. The cost of goods sold is 80% 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 $23,200. Monthly depreciation is $14,200. gnore taxes. Balance Sheet October 31 Assets Cash 22,000 72,000 Accounts receivable Merchandise inventory 145,600 Property, plant and equipment, net of $574,000 accumulated 1,096,000 depreciation $1,335,600 Total assets Liabilities and Stockholders' Equity Accounts payable $ 256,000 822,000 Common stock Retained earnings 257,600 $1,335,600 Total liabilities and stockholders' equity

Answer 1

Correct answer----------$196,800

Working

	November	December	January
Sales	$ 260,000.00	$ 240,000.00	$     230,000.00
Cost of goods sold (80% of above)	$ 208,000.00	$ 192,000.00	$     184,000.00

.

Inventory and purchases Budget
	November	December	January
Cost of goods sold	$        208,000	$        192,000	$           184,000
Plus: Desired ending inventory	$        134,400	$        128,800
Total Inventory required	$        342,400	$        320,800
Less: Beginning inventory	$        145,600	$        134,400
Purchases	$        196,800	$        186,400

Payment for November purchase will be made in december.