Reference no: EM132853815

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

Sales are budgeted at $430,000 for November, $440,000 for December, and $420,000 for January.

Collections are expected to be 40% in the month of sale, 57% 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 20% 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 $78,000.

The November beginning balance in the accounts payable account is $265,000.

Required -

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

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