Question

Capes Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow: . Sales are budgeted at $440,000 for November, $450,000 for December, and $430,000 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 80% 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 $79,000 • The November beginning balance in the accounts payable account is $266,000. Required: a. Prepare a Schedule of Expected Cash Collections for November and December. b. Prepare a Merchandise Purchases Budget for November and December. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a Schedule of Expected Cash Collections for November and December. November December Sales Schedule of Expected Cash Collections Accounts receivable November sales December sales Total cash collections Required A Required B >

Answer 1

Particulars Sales Cost of goods sold (80% of sales) November December 4,40,000 4,50,000 3,52,000 3,60,000 January 4,30,000 3,44,000 Schedule of expected cash collections Accounts receivable November sales December sales Total cash collections 79,000 1,98,000 2,42,000 2,02,500 4,44,500 2,77,000 3,52,000 3,60,000 COGS (Calculated above) Closing merchandise inventory (25% of COGS in the following month) Opening merchandise inventory Purchases (COGS+Closing inventory- Opening inventory) 90,000 88,000 86,000 90,000 3,54,000 3,56,000 Schedule of expected cash payments for purchases 2,66,000 3,54,000 Accounts payable November purchases December purchases Total cash payments 2,66,000 3,54,000