Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: • Sales are budgeted at $360,000 for November, $380,000 for December, and $380,000 for January. • Collections are expected to be 75% in the month of sale, 24% 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 $22,000. • Monthly depreciation is $19,200. • Ignore taxes. Balance Sheet October 31 Assets Cash $30,000 Accounts receivable, net of allowance for uncollectible accounts 78,000 Merchandise inventory 229,500 Property, plant and equipment, net of $606,000 accumulated depreciation 1,180,000 Total assets $1,517,500 Liabilities and Stockholders' Equity Accounts payable $302,750 Common stock 860,000 Retained earnings 354,750 Total liabilities and stockholders' equity $1,517,500 Expected cash collections in December are:
