1) Capes Corporation is a wholesaler of industrial goods. Data regarding the sto

Question

1) Capes Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow: Sales are budgeted at $390,000 for November, $360,000 for Collections are expected to be 85% in the month of sale and 15% in The cost of goods sold is 80% of sales. December, and $340,000 for January the month following the sale. The company desires an ending merchandise inventory equal to 40% is made in the month following the purchase. is $77,000. S320,000. Required: a. Prepare a Schedule of Expected Cash Collections for November and The November beginning balance in the accounts receivable account The November beginning balance in the accounts payable account is December. b. Prepare a Merchandise Purchases Budget for November and December.

Explanation / Answer

Answer

A.Schedule of Expected cash collections:

B.Merchandise purchase budget:

Particulars November December Sales $390000 $360000 Cash collection: Accounts receivable $77000 Nov. sales ($390000*85%)=$331500 ($390000*15%)=$58500 Dec.sales ($360000*85%)=$306000 Total $4085000 $364500

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