Question

Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: Sales are budgeted at $320,000 for November, $300,000 for December, and $290,000 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 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 $23,800. Monthly depreciation is $14,800. Ignore taxes. Balance Sheet October 31 Assets Cash $ 21,400 Accounts receivable 71,400 Merchandise inventory 156,800 Property, plant and equipment, net of $573,400 accumulated depreciation 1,095,400 Total assets $ 1,345,000 Liabilities and Stockholders' Equity Accounts payable $ 255,400 Common stock 821,400 Retained earnings 268,200 Total liabilities and stockholders' equity $ 1,345,000 The difference between cash receipts and cash disbursements for December would be:

Answer 1

Bramble Corporation

The difference between cash receipts and cash disbursements for December would be:

= $71,000

Step-by-step explanation:

a) Data and Calculations:

Balance Sheet October 31

Assets Cash $ 21,400

Accounts receivable 71,400

Merchandise inventory 156,800

Property, plant and equipment,

net of $573,400 accumulated

depreciation 1,095,400

Total assets $ 1,345,000

Liabilities and Stockholders' Equity

Accounts payable $ 255,400

Common stock 821,400

Retained earnings 268,200

Total liabilities and

stockholders' equity $ 1,345,000

November December January

Budgeted sales $320,000 $300,000 $290,000

Cash Collections:

55% month of sale 176,000 165,000 159,500

45% following month 71,400 144,000 135,000

Total collections $247,400 $309,000 $294,500

Cost of goods sold $224,000 $210,000 $203,000

= (70% of Sales for the month)

Ending Inventory 147,000 142,100

Goods available $371,000 $352,000

Beginning Inventory 156,800 147,000 142,100

Purchases $214,200 $205,000

Cash disbursements:

Payment to suppliers 255,400 214,200 205,000

Other monthly exp. 23,800 23,800

Total disbursements $279,200 $238,000

Comparison of Cash receipts with Cash disbursements:

November December

Cash receipts $247,400 $309,000

Cash disbursements $279,200 $238,000

Difference ($31,800) $71,000