Capp Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow:
ο Sales are budgeted at $350,000 for November, $360,000 for December, and $340,000 for January.
ο Collections are expected to be 60% in the month of sale, 39% in the month following the sale, and 1% uncollectible.
ο The cost of goods sold is 75% of sales.
ο The company desires an ending merchandise inventory equal to 40% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
ο The November beginning balance in the accounts receivable account is $70,000.
ο The November beginning balance in the accounts payable account is $257,000.
Required:
a. Prepare a Schedule of Expected Cash Collections for November and December.
b. Prepare a Merchandise Purchases Budget for November and December.

Question

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The Answer of Capp Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow:
ο Sales are budgeted at $350,000 for November, $360,000 for December, and $340,000 for January.
ο Collections are expected to be 60% in the month of sale, 39% in the month following the sale, and 1% uncollectible.
ο The cost of goods sold is 75% of sales.
ο The company desires an ending merchandise inventory equal to 40% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
ο The November beginning balance in the accounts receivable account is $70,000.
ο The November beginning balance in the accounts payable account is $257,000.
Required:
a. Prepare a Schedule of Expected Cash Collections for November and December.
b. Prepare a Merchandise Purchases Budget for November and December.

Capp Corporation Is a Wholesaler of Industrial Goods