Reference no: EM131814992

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

• Sales are budgeted at $350,000 for November, $360,000 for December, and $340,000 for January.
• Collections are expected to be 60% in the month of sale, 39% in the month following the sale, and 1% uncollectible.
• The cost of goods sold is 75% of sales.
• The company desires an ending merchandise inventory equal to 40% 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 $70,000.
• The November beginning balance in the accounts payable account is $257,000.

Required:

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

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