Capes Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow: Sales are budgeted at $320,000 for November, $330,000 for December, and $310,000 for January. Collections are expected to be 40% in the month of sale and 60% in the month following the sale. The cost of goods sold is 75% of sales. The company desires an ending merchandise inventory equal to 20% 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 $67,000. The November beginning balance in the accounts payable account is $254,000. Required: a. Prepare a Schedule of Expected Cash Collections for November and December. b. Prepare a Merchandise Purchases Budget for November and December.

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

	November	December
Sales	$320,000	$330,000
Schedule of Expected Cash Collections
Accounts receivable	$67,000
November sales
December sales
Total cash collections	$67,000	$0

Prepare a Merchandise Purchases Budget for November and December.

Merchandise Purchases Budget	November	December
Cost of goods sold
Add: Desired ending merchandise inventory
Total needs	0	0
Less: Beginning merchandise inventory
Required purchases	$0	$0

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