Question 3 (24 marks) Wonderful Technology Company Limited sells computers and accessories. Data of the store's...

Transcribed Image Text:

Question 3 (24 marks) Wonderful Technology Company Limited sells computers and accessories. Data of the store's operations are as follow: Sales are budgeted at $400,000 for December 2019, $420,000 for January 2020, and $410,000 for February 2020. Collections are expected to be 80% in the month of sale, 18% in the month following the sale, and 2% uncollectible will be recorded as bad debt expense. The cost of goods sold is 58% of sales. The company purchases 70% of its merchandise in the month prior to the month of sale and 30% in the month of sale. Payment for inventory is made in the month following the purchase. Other monthly expenses to be paid in cash are $16,000. Depreciation is $18,000 per month. Other information as at 30 Nov 2019: Accounts receivable (net of allowance for uncollectible accounts) $76,000 Cash Accounts payable $49,000 $190,000 Ignore taxes. There are inventories at end of November. Required: Use this table format (at least 5 columns) for part a. and bi. Item % working % working Dec 2019 Amount ($) Jan 2020 Amount ($) a. Prepare a Schedule of Expected Cash Collection from sales for December 2019 and January 2020. (8 marks) bi. Prepare a Merchandise Purchases Budget for December 2019 and January 2020. (Hint: COGS, Sales) (12 marks) bii. Find the disbursements for merchandise for Dec 2019 and Jan 2020. (4 marks) Question 3 (24 marks) Wonderful Technology Company Limited sells computers and accessories. Data of the store's operations are as follow: Sales are budgeted at $400,000 for December 2019, $420,000 for January 2020, and $410,000 for February 2020. Collections are expected to be 80% in the month of sale, 18% in the month following the sale, and 2% uncollectible will be recorded as bad debt expense. The cost of goods sold is 58% of sales. The company purchases 70% of its merchandise in the month prior to the month of sale and 30% in the month of sale. Payment for inventory is made in the month following the purchase. Other monthly expenses to be paid in cash are $16,000. Depreciation is $18,000 per month. Other information as at 30 Nov 2019: Accounts receivable (net of allowance for uncollectible accounts) $76,000 Cash Accounts payable $49,000 $190,000 Ignore taxes. There are inventories at end of November. Required: Use this table format (at least 5 columns) for part a. and bi. Item % working % working Dec 2019 Amount ($) Jan 2020 Amount ($) a. Prepare a Schedule of Expected Cash Collection from sales for December 2019 and January 2020. (8 marks) bi. Prepare a Merchandise Purchases Budget for December 2019 and January 2020. (Hint: COGS, Sales) (12 marks) bii. Find the disbursements for merchandise for Dec 2019 and Jan 2020. (4 marks)