Question

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

• Sales are budgeted at $370,000 for November, $350,000 for December, and $340,000 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 70% of sales.
• The company would like maintain ending merchandise inventories equal to 60% 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 $24,300.
• Monthly depreciation is $15,300.
• Ignore taxes.

Balance Sheet October 31
Assets
Cash	$	20,300
Accounts receivable		70,300
Merchandise inventory		155,400
Property, plant and equipment, net of $572,300 accumulated depreciation		1,094,300
Total assets	$	1,340,300
Liabilities and Stockholders' Equity
Accounts payable	$	254,300
Common stock		820,300
Retained earnings		265,700
Total liabilities and stockholders' equity	$	1,340,300

Required:

1. Prepare the cash receipts for December.

2. Prepare the cash disbursements for December.

3. Calculate the difference between cash receipts and cash disbursements for December.

Please show process.

Answer 1

Cash receipts for December=$ sale of december*55% + sale of November * 45%

=$ 350000*55% + 370000*45%

=$ 359000

cash disbursements in December =purchase(W.N) + cash expense =$ 232400+ 24300

=$ 256700

Difference =$ 359000-$ 256700

=$ 102300

W.N.

cost of goods sold for November = 370000*70%=$ 259000

opening inventory + purchase- closing inventory= 259000

155400+ purchase- (245000*60%)147000 =$ 259000

Purchase= $250600

cost of goods sold for December  = 350000*70%=$ 245000

opening inventory + purchase- closing inventory= 245000

155400+ purchase- (340000*70%)60%=$ 245000

155400+ purchase -142800=$ 245000

purchase=$ 232400

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