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

Question:

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 December, and $340,000 for January.

Collections are expected to be 85% in the month of sale, 10% in the month following the sale, and 5% uncollectible.

The cost of goods sold is 80% of sales.

The company purchases 40% of its merchandise in the month prior to the month of sale and 60% in the month of sale. 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 $320,000.

Required:

A. Prepare a Merchandise Purchases Budget for November and December

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

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