Asked by Blake cannistraro on Jul 08, 2024
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Capes Corporation is a wholesaler of industrial goods.Data regarding the store's operations follow:
o Sales are budgeted at $390,000 for November, $360,000 for December, and $340,000 for January.
o Collections are expected to be 85% in the month of sale and 15% in the month following the sale.
o The cost of goods sold is 80% of sales.
o 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.
o The November beginning balance in the accounts receivable account is $77,000.
o The November beginning balance in the accounts payable account is $320,000.
Required:
a.Prepare a Schedule of Expected Cash Collections for November and December.
b.Prepare a Merchandise Purchases Budget for November and December.
Schedule of Expected Cash Collections
A detailed projection of the amounts and timing of cash inflows from receivables anticipated to be collected.
Merchandise Purchases Budget
A financial plan that outlines the expected purchases of merchandise inventory over a certain period, considering anticipated sales and desired inventory levels.
Accounts Receivable
Outstanding payments from clients to a business for goods delivered or services rendered, awaiting settlement.
- Construct and analyze budgets for cash collections, merchandise purchases, and cash disbursements.
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Learning Objectives
- Construct and analyze budgets for cash collections, merchandise purchases, and cash disbursements.
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