Question

apes Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow: Sales are budgeted at $370,000 for November, $380,000 for December, and $360,000 for January. Collections are expected to be 45% in the month of sale and 55% in the month following the sale. The cost of goods sold is 70% of sales. The company desires an ending merchandise inventory equal to 25% 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 $72,000. The November beginning balance in the accounts payable account is $259,000. Required: a. Prepare a Schedule of Expected Cash Collections for November and December. b. Prepare a Merchandise Purchases Budget for November and December.

Answer 1

Schedule of Expected Cash Collections
	November	December	January
Sales	$370,000	$380,000	$360,000
Schedule of Expected Cash Collections
Accounts receivables	$72,000	-
November sales	$166,500	$203,500
December sales	-	$171,000
Total cash collections	$238,500	$374,500
Merchandise Purchases Budget
	November	December	January
Sales	$370,000	$380,000	$360,000
Cost of goods sold	$259,000	$266,000	$252,000
Add: Ending inventory	$66,500	$63,000
Total needed	$325,500	$329,000
Less: Beginning inventory	$64,750	$66,500
Required Purchase	$260,750	$262,500