Answered: Required: a. Prepare a Schedule of…

Required: a. Prepare a Schedule of Expected Cash Collections for November and December b. Prepare a Merchandise Purchases Budget for November and December. Complete this ques

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

Question

Capes Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow
• Sales are budgeted at $470,000 for November, $480,000 for December, and $460,000 for January
• Collections are expected to be 60% in the month of sale and 40% in the month following the sale
The cost of goods sold is 70% of sales.
• The compary desires an ending merchandise inventory equal to 40% 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 $82,000.
The November beginning balance in the accounts payable account is $269,000.
Required:
a. Prepare a Schedule of Expected Cash Collections for November and December
b. Prepare a Merchandise Purchases Budget for November and December.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Prepare a Schedule of Expected Cash Collections for November and December.
November
December
Sales
Schedule of Expected Cash Collections
Accounts recelvable
November sales
December sales
Total cash collections
Required B >

Required:
a. Prepare a Schedule of Expected Cash Collections for November and December
b. Prepare a Merchandise Purchases Budget for November and December
Complete this question by entering your answers in the tabs below.
Required A
Required B
Prepare a Merchandise Purchases Budget for November and December.
Merchandise Purchases Budget
Cost of goods sold
November
December
Total needs
Required purchases
< Required A

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ll. Subject Accounting
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Perez Pointers Corporation expects to begin operations on January 1, year 1; it will operate as a specialty sales company that sells laser pointers over the Internet. Perez expects sales in January year 1 to total $210,000 and to increase 20 percent per month in February and March. All sales are on account. Perez expects to collect 68 percent of accounts receivable in the month of sale, 24 percent in the month following the sale, and 8 percent in the second month following the sale. Required Prepare a sales budget for the first quarter of year 1. Determine the amount of sales revenue Perez will report on the year 1 first quarterly pro forma income statement. Prepare a cash receipts schedule for the first quarter of year 1. Determine the amount of accounts receivable as of March 31, year 1. Complete this question by entering your answers in the tabs below. Prepare a sales budget for the first quarter of year 1.
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