Question

TB MC Qu. 8-119 Bramble Corporation is a small wholesaler ...

Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:
Sales are budgeted at $310,000 for November, $290,000 for December, and $280,000 for January.
Collections are expected to be 60% in the month of sale and 40% in the month following the sale.
The cost of goods sold is 65% of sales.
The company would like to maintain ending merchandise inventories equal to 55% 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 $23,700.
Monthly depreciation is $ 14,700.
Ignore taxes.
Balance Sheet
October 31
Assets
Cash $ 21,500
Accounts receivable 71,500
Merchandise inventory 110,825
Property, plant and equipment, net of 1,095,500
$573,500 accumulated depreciation
Total assets $ 1,299,325
Liabilities and Stockholders' Equity
Accounts payable $ 255,500
Common stock 821,500
Retained earnings 222,325
Total liabilities and stockholders' equity $ 1,299,325
The cost of December merchandise purchases would be:_________.

Answer 1

The cost of December merchandise purchases would be $184,825

Step-by-step explanation:

budgeted sales December $290,000

cost of goods sold 65% of sales revenue = $290,000 x 65% = $188,500

+ desired ending inventory = $280,000 x 65% x 55% = $100,000

total goods required = $288,500

- beginning inventory = $290,000 x 65% x 55% = $103,675

total merchandise purchases = $184,825