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Brarin Corporation is a small wholesaler of gourmet food products. Data regarding the store’s operations follow: |
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Sales are budgeted at $460,000 for November, $480,000 for December, and $470,000 for January. |
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Collections are expected to be 45% in the month of sale, 54% in the month following the sale, and 1% uncollectible. |
| ‘ | The cost of goods sold is 80% of sales. |
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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 $24,300. |
| ‘ | Monthly depreciation is $22,200. |
| ‘ | Ignore taxes. |
The difference between cash receipts and cash disbursements in December would be:
| $62,500 | |
| $83,200 | |
| $34,300 | |
| $17,000 |