Question

Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: Sales are budgeted at $460,000 for November, $440,000 for December, and $430,000 for January. Collections are expected to be 45% in the month of sale and 55% 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 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 $25,200. Monthly depreciation is $16,200. Ignore taxes. Balance Sheet October 31 Assets Cash$21,200 Accounts receivable 71,200 Merchandise inventory 220,800 Property, plant and equipment, net of $573,200 accumulated depreciation 1,095,200 Total assets$1,408,400 Liabilities and Stockholders' Equity Accounts payable$255,200 Common stock 821,200 Retained earnings 332,000 Total liabilities and stockholders' equity$1,408,400 The difference between cash receipts and cash disbursements for December would be: Multiple Choice $67,400 $50,550 $37,600 $114,600

Answer 1

Answer:

The difference between cash receipts and cash disbursements for December is $67,400

Explanation:

In order to calculate the difference between cash receipts and cash disbursements for December first we need to calculate both cash receipts and cash disbursements as follows:

Cash receipts =($460,000*55%)+($440,000*45%)

Cash receipts =$451,000

Cash disbursements:  

Purchases =($460,000*80%)+($440,000*80%*60%)-($460,000*80%*60%)

Purchases=$368,000+$211,200-$220,800=$358,400

Other monthly expenses=$25,200  

Total Cash disbursements=$383,600

Therefore, The difference between cash receipts and cash disbursements for December= $451,000-$383,600=$67,400

Difference 84100