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

## Question:

Brarin Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: Sales are budgeted at $380,000 for November,$400,000 for December, and $390,000 for January. Collections are expected to be 60% in the month of sale, 39% in the month following the sale, and 1% uncollectible. The cost of goods sold is 75% of sales. The company would like to maintain ending merchandise inventories equal to 65% 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$23,500. Monthly depreciation is $21,400. Ignore taxes. December cash disbursements for merchandise purchases would be: A.$295,125

B. $294,750 C.$190,125

D. $300,000 ## Cash Disbursements: The cash disbursements are the outflow of the cash. This means the cash goes away from the company when the companies paid for the goods and services purchased. ## Answer and Explanation: December cash disbursements for merchandise purchases = Purchase made in November November Purchase = COGS in November + Ending Inventory of November - Beginning an inventory of November November Purchase = 380,000*75% + 65%*(75%*400,000) - 65%*(75%*380,000) November Purchase =$ 294,750

December cash disbursements for merchandise purchases = \$294,750