Capp Corporation is a wholesaler of industrial goods. Data regarding the store's operations...
Question:
Capp Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow :
1.) Sales are budgeted at
| November | $ 430,000 |
| December | $440,000 |
| January | $420,000 |
2.) Collections are expected to be 40% in the month of sale, 57% in the month following the sale, and 3% uncollectible.
3.) The cost of goods sold is 75% of sales.
4.) The Company desires an ending merchandise inventory equal to 20% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
5.) The November beginning balance in the accounts receivable account is $78,000.
6.) The November beginning balance in the accounts payable account is $265,000.
A. Prepare a schedule of expected cash collections for November and December.
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.)
Capp Corporation
Merchandise Purchases Budget
| November | December | |
|---|---|---|
| Budgeted Cost of Goods sold | ||
| Total Needs | ||
| Required Purchase | $ | $ |
Cash Collections:
When the goods are sold on credit, the cash is collected from the buyer after a certain credit period. The collection policies of a company may be to collect certain percentage in the month of sales, and some percentage in the month following the sales. Any amount that remains uncollectible, is called as bad debts and has to be written off in the period in which the sales are made.
Answer and Explanation: 1
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View this answerA) Schedule of expected cash collections for November and December is made below:
Capp Corporation
Schedule of Expected Cash Collections
| Novembe... |
|---|
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