.Prepare a Schedule of Expected Cash Collections for November and December. 2.Prepare a Merchandise Purchases Budget for November and December.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Capid Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow:
Sales are budgeted at $360,000 for November, $330,000 for December, and $320,000 for January.
Collections are expected to be 60% in the month of sale, 36% in the month following the sale, and 4% uncollectible.
The cost of goods sold is 75% of sales.
The company purchases 40% of its merchandise in the month prior to the month of sale and 60% in the month of sale. Payment for merchandise is made in the month following the purchase.
The November beginning balance in the
The November beginning balance in the accounts payable account is $271,000.
Required:
1.Prepare a Schedule of Expected Cash Collections for November and December.
2.Prepare a Merchandise Purchases Budget for November and December.
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