Capid Corporation is a wholesaler of industrial goods. Data regarding the store's operations...
Question:
Capid Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow:
a) Sales are budgeted at $370,000 for November, $380,000 for December, and $360,000 for January.
b) Collections are expected to be 45% in the month of sale, 52% in the month following the sale, and 3% uncollectible.
c) The cost of goods sold is 70% of sales.
d) The company desires an ending merchandise inventory equal to 25% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
e) The November beginning balance in the accounts receivable account is $72,000.
f) The November beginning balance in the accounts payable account is $259,000.
Required:
1) Prepare a Schedule of Expected Cash Collections for November and December.
2) Prepare a Merchandise Purchases Budget for November and December.
Cash Collection Budget
A cash collection budget is a schedule showing the estimated amount of cash collection to be made from sales during a month, quarter, or year. The estimated amounts are based on the average estimated percentage on sales which is also based on the previous experience or operation of the business.
Answer and Explanation: 1
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Schedule of Expected Cash Collections
| November | December | Total | ||
|---|---|---|---|---|
| Collections: | ... | |||
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