The Adams Corporation, a merchandising firm, has budgeted its activity for Novem

Question

The Adams Corporation, a merchandising firm, has budgeted its activity for November according to the following information: Sales at $580,000, all for cash Merchandise inventory on October 31 was $265,000. The cash balance November 1 was $31,000. Selling and administrative expenses are budgeted at $99,000 for November and are paid for in cash .Budgeted depreciation for November is $51,000. The planned merchandise inventory on November 30 is $295,000. The cost of goods sold is 70% of the selling price. All purchases are paid for in cash. There is no interest expense or Income tax expense.

Explanation / Answer

Budgeted Cash Receipts for November are $580,000 (i.e From Sales)

..

..

Budgeted Net Cash Receipts after all payments :-

Sales = 580,000

Less:-Selling & Admin Exp = (99,000)

Less:-Purcahses payment = (436,000)

Net Cash Receipt = 45,000

..

..

Note:-

Cost of Goods Sold = 70% of Sales

= 70% of 580,000

= $406,000

Cost of Goods Sold = Opening Inventory + Purchases - Closing Inventory

406,000 = 265,000 + Purchases - 295,000

Purchases = 406,000 + 295,000 - 265000

Purchases = 436,000

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.