Question

Capes Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow. 101 • Sales are budgeted at $420,000 for November, $430,000 for December, and $410,000 for January • Collections are expected to be 60% in the month of sale and 40% in the month following the sale. • The cost of goods sold is 70% of sales. • The company desires an ending merchandise inventory equal to 40% 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 $77,000. • The November beginning balance in the accounts payable account is $264,000. Required: a. Prepare a Schedule of Expected Cash Collections for November and December b. Prepare a Merchandise Purchases Budget for November and December Complete this question by entering your answers in the tabs below. Required A Required Prepare 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 colections

Answer 1

	Nov	Dec
Sales	420000	430000
Schedule of expected cash collections
Accounts receivables	77000
Nov Sales	252000	168000
Dec Sales		258000
Total Cash Collections	329000	426000
b.Merchandise Purchase Budget
	Nov	Dec	Jan
Sales	420000	430000	410000
COGS	294000	301000	287000
Desired Ending Inventory	120400	114800
Total Required	414400	415800
Less: Beginning Inventory	117600	120400
Total Purchases	296800	295400
Payment
Accounts payable	264000
Nov Purchases		296800
Total payment	264000	296800