Sales are budgeted at $320,000 for November,$340,000 for December, and $330,000 for January

Collections are expected to be 75% in the month of sale,20% in the month following the sales,and 5% uncollectible

The cost of goods sold is 65% of sales

The company desires ending merchandise inventory to equal 80% of the following months cost of goods sold.

Other monthly expenses to be paid in cash are $21,000

Monthly depreciation is $16,000

Ignore taxes

Checkpoint : Total Assets for the end of December should equal $1,581,200

Statement of Financial Position

October 31

Assets

Cash $22,000

Accounts receivable (net of allowance for uncollectible accounts) 82,000

Merchandise inventory 166,400

Property, Plant and equipment(net of $658,000 accumulated depreciation) 1,170,000

Total assets 1,440,400

Liabilities and Stockholders Equity

Accounts payable $199,000

Common Stock 840,000

Retained earnings 401,400

Total liabilities and stockholders equity $1,440,000

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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