Reference no: EM132726363

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

Sales are budgeted at $350,000 for November, $320,000 for December, and $300,000 for January.

Collections are expected to be 80% in the month of sale, 16% in the month following the sale, and 4% uncollectible.

The cost of goods sold is 10% of sales.

The company desires an ending merchandise inventory equal to 60% of the cost of goods sold in the following month. Payment for merchandise is made in the month following the purchase.

The November depreciation is $48,000.

The November estimated tax payable is $78,000.

Selling and administrative expenses will amount to $100,000 per month.

The November beginning balance in the accounts receivable account is $78,000.

The November beginning balance in the accounts payable account is $254,000, which will be paid in December.

Required -

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

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

c) Discuss any TWO (2) bene?ts that organizations gain from using budgetary planning systems.