Question

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 Decembe

Answer 1

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) Calculation of Accounts Payable
Closing balance of Accounts payable is equal to purchases of december.