Schedule of expected cash collections

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Reference no: EM13146913

Capid Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow:

• Sales are budgeted at $360,000 for November, $330,000 for December, and $320,000 for January.

• Collections are expected to be 60% in the month of sale, 36% in the month following the sale, and 4% uncollectible.

• The cost of goods sold is 75% 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 $271,000.

Required:

a. Prepare a Schedule of Expected Cash Collections for November and December.

b. Prepare a Merchandise Purchases Budget for November and December.

Reference no: EM13146913

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