Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:Sales are budgeted at $210,000 for November, $190,000 for December, and $180,000 for January.
Collections are expected to be 50% in the month of sale and 50% in the month following the sale.
The cost of goods sold is 55% of sales.
The company would like maintain ending merchandise inventories equal to 45% 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 $22,700.
Monthly depreciation is $13,700.
Ignore taxes.
Balance SheetOctober 31Assets Cash$22,500?Accounts receivable 72,500?Merchandise inventory 51,975?Property, plant and equipment, net of $574,500 accumulated depreciation 1,096,500?Total assets$1,243,475? Liabilities and Stockholders' Equity Accounts payable$256,500?Common stock 822,500?Retained earnings 164,475?Total liabilities and stockholders' equity$1,243,475??The cost of December merchandise purchases would be:
A. $44,550
B. $102,025
C. $115,500
D. $104,500
Answer: B
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