New New Corporation is a wholesaler of industrial goods. Data regarding the stor
ID: 2427162 • Letter: N
Question
New New Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow:
1. Please Prepare a merchandise purchases budget for November and December.
-Sales are budgeted at $390,000 for November, $360,000 for December, and $340,000 for January.
-Collections are expected to be 85% in the month of sale, 10% in the month following the sale, and 5% uncollectible.
-The cost of goods sold is 80% of sales.
-The company purchases 40% of its merchandise in the month prior to the month of sale and 60% in the month of sale. Payment for merchandise is made in the month following the purchase.
-The November beginning balance in the accounts receivable account is $77,000.
-The November beginning balance in the accounts payable account is $320,000.
1. Please Prepare a merchandise purchases budget for November and December.
Explanation / Answer
Mercandise Budget For November & December C) Purchase Budget November December Total Opening Inventory 156000 144000 300000 Purchases 60% in the month of sale S*60% 234000 216000 450000 Closing Inventory (40% of following month sales) S 144000 136000 280000 360000*40% 340000*40% Cost of Good Sold (80% of sales S) 312000 288000 600000 d)Cash Disbursements Paid in next month 320000 234000 554000 Total 320000 234000 554000 November December January Total in $ Sales in $ S 390000 360000 340000 1090000 Opening Invento Opening Inventory (fo nov is closing Inv of Oct which is 40% of November sale= 40% * 390000) 156000 144000 300000 November Closing Inventory will become opening inventory of December