Question

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

  

•	Sales are budgeted at $440,000 for November, $460,000 for December, and $460,000 for January.
•	Collections are expected to be 85% in the month of sale, 14% in the month following the sale, and 1% uncollectible.
•	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 $22,800.
•	Monthly depreciation is $20,000.
•	Ignore taxes.

Balance Sheet
October 31
Assets
Cash	$38,000
Accounts receivable, net of allowance for uncollectible accounts	86,000
Merchandise inventory	246,400
Property, plant and equipment, net of $614,000 accumulated depreciation	1,220,000
Total assets	$1,590,400
Liabilities and Stockholders' Equity
Accounts payable	$285,650
Common stock	940,000
Retained earnings	364,750
Total liabilities and stockholders' equity	$1,590,400

  
December cash disbursements for merchandise purchases would be:

Answer 1

December Cash disbursement = November purchase

November purchase = Cost of goods sold+Ending inventory-Beginning inventory

                              = (440000*80%)+(460000*80%*70%)-246400

November purchase = $363200

December Cash disbursement for merchandise purchases would be : $363200