Question

Capp Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow:

Sales are budgeted at $290,000 for November, $300,000 for December, and $280,000 for January.

Collections are expected to be 55% in the month of sale, 44% in the month following the sale, and 1% uncollectible.

The company desires an ending merchandise inventory equal to 35% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase.

The November beginning balance in the accounts payable account is $251,000.

a.

Prepare a Schedule of Expected Cash Collections for November and December. (Omit the “$” sign in your response.)

b.

Prepare a Merchandise Purchases Budget for November and December. (Input all amounts as positive values. Omit the “$” sign in your response.)

Sales are budgeted at $290,000 for November, $300,000 for December, and $280,000 for January.

Collections are expected to be 55% in the month of sale, 44% in the month following the sale, and 1% uncollectible.

The cost of goods sold is 75% of sales.

The company desires an ending merchandise inventory equal to 35% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase.

The November beginning balance in the accounts receivable account is $64,000.

The November beginning balance in the accounts payable account is $251,000.

 

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