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 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 $24,000. •Monthly depreciation is $15,000. •Ignore taxes. Balance SheetOctober 31Assets Cash$20,000Accounts receivable 70,000Merchandise inventory 153,000Property, plant and equipment,
net of $572,000 accumulated depreciation 1,094,000Total assets$ 1,337,000 Liabilities and Stockholders' Equity Accounts payable$254,000Common stock 820,000Retained earnings 263,000Total liabilities and stockholders' equity$ 1,337,000The cost of December merchandise purchases would be:
A. $255,000
B. $240,000
C. $139,500
D. $235,500
Answer: D
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