Capes Corporation is a wholesaler of industrial goods. Data regarding the store\

Question

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

Sales are budgeted at $260,000 for November, $270,000 for December, and $250,000 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 60% of sales.

The company 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 $61,000.

The November beginning balance in the accounts payable account is $248,000.

Required:

a. Prepare a Schedule of Expected Cash Collections for November and December.

b. Prepare a Merchandise Purchases Budget for November and December.

Prepare a Schedule of Expected Cash Collections for November and December.

Prepare a Merchandise Purchases Budget for November and December.

Explanation / Answer

Collection pattern = 60% in the month of sale and 40% in the month following the sale.

Schedule of Expected Cash Collections for November and December.

-----------------------------------------------------------------------------------------------

Ending merchandise inventory = 40% of the cost of goods sold in the following month.

Merchandise Purchases Budget for November and December.

November December Sales 260,000 270,000 Schedule of Expected Cash Collections Accounts receivable 61,000 104,000 (260,000*40%) November sales 156,000 (260,000*60%) December sales 162,000 (270,000*60%) Total cash collections 217,000 266,000

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

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