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The company would like to maintain ending merchandise

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Reference no: EM13566064

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

 

•Sales are budgeted at $430,000 for November, $450,000 for December, and $440,000 for January.

•Collections are expected to be 60% in the month of sale, 39% in the month following the sale, and 1% uncollectible.
• The cost of goods sold is 85% of sales.

•The company would like to maintain ending merchandise inventories equal to 75% 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 $21,900.

• Ignore taxes.

Expected cash collections in December are:
$270,000
$437,700
$450,000
$167,700

Reference no: EM13566064

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