Bramble Corporation is a small wholesaler of gourmet food products.
Data regarding the store’s operations follow: Sales are budgeted at $340,000 for November, $320,000 for December, and $310,000 for January.
Collections are expected to be 80% in the month of sale and 20% in the month following the sale.
The cost of goods sold is 75% 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 $24,000. Monthly depreciation is $15,000. Ignore taxes. Balance Sheet October 31
Assets Cash $ 20,000
Accounts receivable 70,000
Merchandise inventory 153,000
Property, plant and equipment, net of $572,000
accumulated depreciation 1,094,000
Total assets $ 1,337,000
Liabilities and Stockholders’ Equity Accounts payable $ 254,000
Common stock 820,000
Retained earnings 263,000
Total liabilities and stockholders’ equity $ 1,337,000
The cost of December merchandise purchases would be: Multiple Choice