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.)
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Sales are budgeted at $290,000 for November, $300,000 for December, and $280,000 for January. |
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Collections are expected to be 55% in the month of sale, 44% in the month following the sale, and 1% uncollectible. |
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The cost of goods sold is 75% of sales. |
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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. |
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The November beginning balance in the accounts receivable account is $64,000. |
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The November beginning balance in the accounts payable account is $251,000. |
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