Question: The Zel Company operates at local flea markets and has

The Zel Company operates at local flea markets and has budgeted sales as follows for the next three months.

Zel’s success in this specialty market is due mostly to the extension of credit terms and the budgeting techniques implemented by the firm’s owner, Barbara Zel. Ms. Zel is a recycler; she collects her merchandise daily at neighborhood garage sales and sells the merchandise weekly at regional flea markets. All merchandise is marked up to sell at its purchase cost plus 25%. Stated differently, cost is 80% of the selling price. Merchandise inventories at the beginning of each month are 30% of that month’s forecasted cost of goods sold. With respect to sales on account, 40% of receivables are collected in the month of sale, 50% are collected in the month following, and 10% are never collected.

A. What is the anticipated cost of goods sold for June?
B. What is the beginning inventory for July expected to be?
C. What are the July purchases expected to be?
D. What are the forecasted July cashcollections?

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  • CreatedJanuary 26, 2015
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