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BBTalk Company Limited sells tiles and other decoration products. Data of the store's operations are as follow: Sales are budgeted at $340,000 for November 2019,
BBTalk Company Limited sells tiles and other decoration products. Data of the store's operations are as follow:
- Sales are budgeted at $340,000 for November 2019, $320,000 for December 2019, and $330,000 for January 2020.
- Collections are expected to be 85% in the month of sale, 14% in the month following the sale, and 1% uncollectible will be recorded as bad debt expense.
- The cost of goods sold is 60% of sales.
- The company purchases 78% of its merchandise in the month prior to the month
- of sale and 22% in the month of sale. Payment for inventory is made in the month
following the purchase.
- Depreciation is $20,200 per month.
- Other monthly expenses to be paid in cash are $18,000.
- Other information as at 31 Oct 2019:
- Cash
- Accounts receivable (net of allowance for uncollectible accounts) Accounts payable
- Ignore taxes.
- Required:
- Prepare Schedule of Expected Cash Collection for November and December.
- Prepare Merchandise Purchases Budget for November and December.
- Prepare Cash Budget showing the captions with figures of beginning, excess/(deficiency), ending balance and so on for November and December.
- Prepare Income Statement Budget for November and December.
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