Caprice Corporation is a wholesaler of industrial goods. Data regarding the stor
ID: 2500358 • Letter: C
Question
Caprice Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow: Sales are budgeted at $240,000 for November, $250,000 for December, and $230,000 for January. Collections are expected to be 45% in the month of sale, 52% in the month following the sale, and 3% uncollectible. The cost of goods sold is 75% of sales. 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. The November beginning balance in the accounts receivable account is $59,000. The November beginning balance in the accounts payable account is $246,000. Prepare a Schedule of Expected Cash Collections for November and December. Prepare a Merchandise Purchases Budget for November and December. (Input all amounts positive values.)Explanation / Answer
a. Schedule of expected cash collections:
b. Cost of goods sold = Beginning inventory + purchase - ending inventory
or Purchase = Cost of goods sold + ending inventory - beginning inventory
Merchandise Purchases Budget
November December Sales 240,000 250,000 Collection of October sales 59,000 Collection of November sales 108,000 124,800 Collection of December sales 112,500 167,000 237,300