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Capes Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow: Sales are budgeted at $430,000 for November, $440,000 for December, and

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

  • Sales are budgeted at $430,000 for November, $440,000 for December, and $420,000 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 $78,000.
  • The November beginning balance in the accounts payable account is $265,000.

Required:

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

b. Prepare a Merchandise Purchases Budget for November and December.

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