apes 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 and 55% in the month following the sale. The cost of goods sold is 75% of sales. The company desires an ending merchandise inventory equal to 25% of the cost of goods sold in the following month. 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. Required: a. Prepare a Schedule of Expected Cash Collections for November and December. b. Prepare a Merchandise Purchases Budget for November and December.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Capes 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 and 55% in the month following the sale.
- The cost of goods sold is 75% of sales.
- The company desires an ending merchandise inventory equal to 25% of the cost of goods sold in the following month. 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.
Required:
a. Prepare a Schedule of Expected Cash Collections for November and December.
b. Prepare a Merchandise Purchases Budget for November and December.
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