Question

In: Accounting

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

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

  • Sales are budgeted at $410,000 for November, $420,000 for December, and $400,000 for January.
  • Collections are expected to be 65% in the month of sale and 35% in the month following the sale.
  • The cost of goods sold is 60% of sales.
  • The company desires an ending merchandise inventory equal to 45% 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 $76,000.
  • The November beginning balance in the accounts payable account is $263,000.

Required:

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

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

repare 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

Prepare a Merchandise Purchases Budget for November and December.

Merchandise Purchases Budget November December
Cost of goods sold
Total needs 0 0
Required purchases $0 $

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