Capp Corporation is a wholesaler of industrial goods. Data regarding the store’s operations follow:
| %u2022 |
Sales are budgeted at $460,000 for November, $470,000 for December, and $450,000 for January. |
| %u2022 |
Collections are expected to be 55% in the month of sale, 42% in the month following the sale, and 3% uncollectible. |
| %u2022 | The cost of goods sold is 60% of sales. |
| %u2022 |
The company desires an ending merchandise inventory equal to 35% of the following month’s cost of goods sold. Payment for merchandise is made in the month following the purchase. |
| %u2022 | The November beginning balance in the accounts receivable account is $81,000. |
| %u2022 | The November beginning balance in the accounts payable account is $268,000. |
| Required: |
| a. |
Prepare a Schedule of Expected Cash Collections for November and December. (Omit the “$” sign in your response.) |
| Capp Corporation Schedule of Expected Cash Collections |
|||
| November | December | ||
| Sales | $ | $ | |
| Schedule of Expected Cash Collections | |||
| Accounts receivable | $ | ||
| November sales | $ | ||
| December sales | |||
|
|
|
||
| Total cash collections | $ | $ | |
|
|
|
||
|
|
|||
| b. |
Prepare a Merchandise Purchases Budget for November and December. (Input all amounts as positive values. Omit the “$” sign in your response.) |
| Capp Corporation Merchandise Purchases Budget |
|||
| November | December | ||
| Budgeted cost of goods sold | $ | $ | |
| (Click to select) Deduct Add : (Click to select) Beginning merchandise inventory Desired ending merchandising inventory | |||
|
|
|
||
| Total needs | |||
| (Click to select) Add Deduct : (Click to select) Beginning merchandise inventory Desired ending merchandising inventory | |||
|
|
|
||
| Required purchase | $ | $ | |