16) Caribbean Construction Corporation supplies materials and lease machinery fo
ID: 2393752 • Letter: 1
Question
16) Caribbean Construction Corporation supplies materials and lease machinery for construction. Data regarding the store's operations follow: Sales are budgeted at $375,000 for November, S280,250 for December, and S298,654 for January Collections are expected to be 60% in the month of sale, 30% in the month following the sale, and 10% uncollectible. The cost of goods sold is 60% of sales. The company desires an ending merchandise inventory equal to 55% of the cost of goods sold in the following month Payment for merchandise is made in the month folowing the purchase. Other monthly expenses to be paid in cash are $18,956. Monthly depreciation is S17,500. - " " Ignore taxes. Balance Sheet October 31 Cash Accounts receivable (net of allowance for uncollectible accounts) S16,000 74,000 140.400 L066000 Property, plant and equipment (net of$500,000 accumulated depreciation) Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity $240,000 640,000 416.400 Required: a. Prepare a Schedule of Expected Cash Collections for November and December. b. Prepare a Merchandise Purchases Budget for November and December c. Prepare Cash Budgets for November and December d. Prepare Budgeted Income Statements for November and December e. Prepare a Budgeted Balance Sheet for the end of DecemberExplanation / Answer
Schedule of Cash Receipts
November
December
Cash Sales
$ 225,000.00
$ 168,150.00
Cash Received Against Previous Month Credit Sales
$ 74,000.00
$ 112,500.00
Total Cash Receipts
$ 299,000.00
$ 280,650.00
Inventory Purchases Budget
November
December
Cost of Goods Sold
$ -
$ 225,000.00
$ 168,150.00
Opening Inventory
$ 140,400.00
$ 92,482.50
Closing Inventory Needed
$ 92,482.50
$ 98,555.60
Purchases (Balancing Figure)
$ 177,082.50
$ 174,223.10
Cash Budget
November
December
Opening Cash
$ 16,000.00
$ 56,044.00
Cash from sales and Accounts Receivables
$ 299,000.00
$ 280,650.00
Total Cash Available
$ 315,000.00
$ 336,694.00
Cash Disbursements
Cash paid for purchase of merchandise
$ 240,000.00
$ 177,082.50
Cash Expenses
$ 18,956.00
$ 18,956.00
Total Cash Disbursements
$ 258,956.00
$ 196,038.50
Closing Cash Balance
$ 56,044.00
$ 140,655.50
Carribian Contraction Corporation
Budgeted Income Statement For November- December
Revenue
$ 655,250.00
Cost of Goods Sold
$ 393,150.00
Gross Profit
$ 262,100.00
Expenses
$ 37,912.00
Depreciation
$ 35,000.00
Bad Depts written off
$ 65,525.00
Net Profit
$ 123,663.00
Carribian Construction Corporation
Budgeted Balance Sheet at December
Assets
Accounts Receivable
$ 84,075.00
Cash
$ 140,655.50
Merchandise Inventory
$ 98,555.60
Property plant and Equipment (net of Accumulated Depreciation $ 535000)
$ 1,031,000.00
Total Assets
$ 1,354,286.10
Liabilities and Equity
Accounts Payables
$ 174,223.10
Common Stock
$ 640,000.00
Retained earnings (416400+123663)
$ 540,063.00
Total Liabilities and Equity
$ 1,354,286.10
Notes
1) Calculation of Accounts Receivables
December sales
$ 280,250.00
Accounts Receivables--30% of December sale
84075
2) Closing balance of Accounts payable is equal to purchases of december.
Schedule of Cash Receipts
November
December
Cash Sales
$ 225,000.00
$ 168,150.00
Cash Received Against Previous Month Credit Sales
$ 74,000.00
$ 112,500.00
Total Cash Receipts
$ 299,000.00
$ 280,650.00
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