Question

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

• Sales are budgeted at $390,000 for November, $370,000 for December, and $360,000 for January.
• Collections are expected to be 40% in the month of sale and 60% in the month following the sale.
• The cost of goods sold is 80% of sales.
• The company would like 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 $24,500.
• Monthly depreciation is $15,500.
• Ignore taxes.

Balance Sheet October 31
Assets
Cash	$20,000
Accounts Receivable	70,000
Merchandise inventory	153,000
Property, Plan and equipment, net $572,000 accumulated depreciation	1,094,000
Total Assets	$1,337,000
Liabilities and Stockholder's Equity
Accounts Payable	$254,000
Common Stock	820,000
Retained Earnings	263,000
Total Liabilities and Stockholders' Equity	$1,337,000

Required :

Calculate the expected cash collections of December.

Please show process.

Answer 1

The expected cash collections of December.= $366,000

Working

Total collection in December
60% of November sales	$ 222,000.00
40% of December sales	$ 144,000.00
Total collection in December	$ 366,000.00