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 Decembec, 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 s 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. - Ignore taxes. The difference between cash receipts and cash disbursements for December woula de:

Answer 1

To determine the difference between cash receipts and disbursements for December at Bramble Corporation, cash receipts totaling $249,000 are calculated from sales in December and collections from November. Cash disbursements include $134,400 for inventory payments and $23,200 for other expenses, totaling $157,600. The difference is $91,400.

Step-by-step explanation:

Cash Receipts and Disbursements for December

To calculate the cash receipts for December, we consider both the collections from December's sales and the collections from the November sales.

December Sales: $240,000

Collect 55% in December: $240,000 × 55% = $132,000

November Sales: $260,000

Collect 45% in December (from November sales): $260,000 × 45% = $117,000

Total cash receipts for December: $132,000 (December) + $117,000 (November) = $249,000

Next, we calculate total cash disbursements for December, which includes the cost of goods sold, payment for November's inventory, and other expenses.

December's Cost of Goods Sold (COGS): $240,000 × 80% = $192,000

November's inventory payment (70% of December's COGS): $192,000 × 70% = $134,400

Other expenses (paid in cash): $23,200

Monthly depreciation (not a cash outflow): $14,200

Total cash disbursements for December: $134,400 (inventory) + $23,200 (Other expenses) = $157,600

Finally, we compute the difference between cash receipts and cash disbursements:

Total cash receipts: $249,000

Total cash disbursements: $157,600

Difference (Receipts - Disbursements): $249,000 - $157,600 = $91,400