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Prepare a merchandise purchases budget for november

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Reference no: EM131768804

Question - 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: EM131768804

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