Capes Corporation is a wholesaler of industrial goods. Data regarding the store\
ID: 2573652 • Letter: C
Question
Capes Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow:
Sales are budgeted at $370,000 for November, $380,000 for December, and $360,000 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 70% 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 $72,000.
The November beginning balance in the accounts payable account is $259,000.
Required:
a. Prepare a Schedule of Expected Cash Collections for November and December.
b. Prepare a Merchandise Purchases Budget for November and December.
Required B
Prepare a Merchandise Purchases Budget for November and December.
Prepare a Schedule of Expected Cash Collections for November and December.
Explanation / Answer
Required information is as calculated below:
November December Sales 370,000 380,000 Schedule of Expected Cash Collections Accounts receivable 72,000 November sales (45% in November and 55% in December) 166,500 203,500 December sales (45% in December) 171,000 Total cash collections 238,500 374,500 Merchandise Purchases Budget November December Cost of goods sold (70% of sales)= a 259,000 266,000 Add: Ending Inventory (25% of cost of goods sold of following month)= b 66,500 63,000 Total needs (a+b) = c 325,500 329,000 Less: Beginning Inventory d 64,750 66,500 Required purchases c-d 260,750 262,500 November Ending Inventory = 266,000*25%= 66,500 December Ending Inventory 360,000*.7*.25 = 63,000 November Beginning inventory = 259,000*.25 = 64,750Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.