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

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Accounting

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

Sales are budgeted at $430,000 for November, $450,000 for December, and $450,000 for January.

Collections are expected to be 85% in the month of sale, 14% in the month following the sale, and 1% uncollectible.
The cost of goods sold is 85% of sales.

The company would like to maintain ending merchandise inventories equal to 75% 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 $19,900.
Ignore taxes.

Balance Sheet
October 31
Assets
Cash $37,000
Accounts receivable, net of allowance for uncollectible accounts 85,000
Merchandise inventory 274,125
Property, plant and equipment, net of $613,000 accumulated depreciation 1,215,000
Total assets $1,611,125
Liabilities and Stockholders' Equity
Accounts payable $317,625
Common stock 930,000
Retained earnings 363,500
Total liabilities and stockholders' equity $1,611,125

Expected cash collections in December are:

$450,000

$442,700

$382,500

$60,200

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