apes Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow:   Sales are budgeted at $240,000 for November, $250,000 for December, and $230,000 for January. Collections are expected to be 45% in the month of sale and 55% in the month following the sale. The cost of goods sold is 75% of sales. The company desires an ending merchandise inventory equal to 25% of the cost of goods sold in the following month. Payment for merchandise is made in the month following the purchase. The November beginning balance in the accounts receivable account is $59,000. The November beginning balance in the accounts payable account is $246,000.   Required: a. Prepare a Schedule of Expected Cash Collections for November and December. b. Prepare a Merchandise Purchases Budget for November and December.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Capes Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow:

 

  • Sales are budgeted at $240,000 for November, $250,000 for December, and $230,000 for January.
  • Collections are expected to be 45% in the month of sale and 55% in the month following the sale.
  • The cost of goods sold is 75% of sales.
  • The company desires an ending merchandise inventory equal to 25% of the cost of goods sold in the following month. Payment for merchandise is made in the month following the purchase.
  • The November beginning balance in the accounts receivable account is $59,000.
  • The November beginning balance in the accounts payable account is $246,000.

 

Required:

a. Prepare a Schedule of Expected Cash Collections for November and December.

b. Prepare a Merchandise Purchases Budget for November and December.

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