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

Brarin Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: Sales are budgeted at $350,000 for November,$370,000 for December, and $360,000 for January. Collections are expected to be 45% in the month of sale, 53% in the month following the sale, and 2% uncollectible. The cost of goods sold is 75% of sales. The company would like to maintain ending merchandise inventories equal to 80% 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$23,200. Monthly depreciation is $21,100. Ignore taxes. December cash disbursements for merchandise purchases would be: a.$274,500 b.$216,000c.$277,500 d.$271,500 ## Cash disbursements: The cash disbursements are known as a cash payment. The cash payment is the amount of cash paid to the other party in an accounting period by the company. It also includes electronic payments along with cash. ## Answer and Explanation: Brarin Corporation  November December January A Sales$ 3,50,000 $3,70,000$ 3,60,000 B Cost of Goods sold (75% of sales) $2,62,500$ 2,77,500 $2,70,000 C Ending Inventory (80% of next months CGS)$ 2,22,000 $2,16,000 D Beginning Inventory$ 2,10,000 $2,22,000$ 2,16,000 E Purchases ( B + C - D) $2,74,500$ 2,71,500 F Payment for purchase (paid in next month) $2,74,500$ 2,71,500

Answer December cash disbursements for merchandise purchase would be \$ 274,500

Note: Closing inventory of October will be 80 % of the cost of goods sold in the month of november.