1. Mountaineers sells its rock-climbing shoes worldwide. Mountaineers expects to sell 4,000 pairs of shoes for $165 each in January, and 2,000 pairs of shoes for $220 each in February. All sales are cash only.

Prepare the sales budget for January and February.

2. Review your results from exercise 3. Mountaineers expects cost of goods sold to average 75% of sales revenue, and the company expects to sell 4,600 pairs of shoes in March for $240 each. Mountaineers target ending inventory is $18,000 plus 45% of the next months cost of goods sold.

Review your results from exercise 3. Mountaineers expects cost of goods sold to average 75% of sales revenue, and the company expects to sell 4,600 pairs of shoes in March for $240 each. Mountaineers target ending inventory is $18,000 plus 45% of the next months cost of goods sold.

Requirement

R1. Use this information and the sales budget prepared in S21-3 to prepare Mountaineers inventory, purchases, and cost of goods sold budget for January and February.

3. Refer to the Mountaineers sales budget that you prepared in exercise 3. Now assume that Mountaineers sales are 20% cash and 80% on credit. Mountaineers collection history indicates that credit sales are collected as follows:

November sales totaled $386,000 and December sales were $399,500.

Requirement

Prepare a schedule for the budgeted cash collections for January and February.