The Adams Corporation, a merchandising firm, has budgeted its activity for Novem

Question

The Adams Corporation, a merchandising firm, has budgeted its activity for November according to the following information:

• Sales at $562,000, all for cash.
• Merchandise inventory on October 31 was $242,000.
• The cash balance November 1 was $20,600.
• Selling and administrative expenses are budgeted at $68,000 for November and are paid for in cash.
• Budgeted depreciation for November is $32,400.
• The planned merchandise inventory on November 30 is $278,700.
• The cost of goods sold is 80% of the selling price.
• All purchases are paid for in cash.
• There is no interest expense or income tax expense.

The budgeted cash receipts for November are:

$112,400

Explanation / Answer

The budgeted cash receipts for November are $562,000

Explanation : Since budgeted sales are on cash basis thus 100 % of the budgeted sales shall be the budgeted cash ie  $562,000 * 100 % = $562,000

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