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.