Question
Capes Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow: Sales are budgeted at $470,000 for November, $480,000 for December, and
Capes Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow:
Sales are budgeted at $470,000 for November, $480,000 for December, and $460,000 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 $82,000.
The November beginning balance in the accounts payable account is $269,000.
Required:
Prepare a Schedule of Expected Cash Collections for November and December.
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Prepare a Merchandise Purchases Budget for November and December.
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