Caribbean Construction Corporation supplies materials and le

Caribbean Construction Corporation supplies materials and lease machinery for construction. Data regarding the store\'s operations follow: Sales are budgeted at $375,000 for November, S280,250 for December, and S298,654 for January Collections are expected to be 60% in the month of sale, 30% in the month following the sale, and 10% uncollectible. The cost of goods sold is 60% of sales. The company desires an ending merchandise inventory equal to 55% of the cost of goods sold in the following month Payment for merchandise is made in the month folowing the purchase. Other monthly expenses to be paid in cash are $18,956. Monthly depreciation is S17,500. - \" \" Ignore taxes. Balance Sheet October 31 Cash Accounts receivable (net of allowance for uncollectible accounts) S16,000 74,000 140.400 L066000 Property, plant and equipment (net of$500,000 accumulated depreciation) Total assets Liabilities and Stockholders\' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders\' equity $240,000 640,000 416.400 Required: a. Prepare a Schedule of Expected Cash Collections for November and December. b. Prepare a Merchandise Purchases Budget for November and December c. Prepare Cash Budgets for November and December d. Prepare Budgeted Income Statements for November and December e. Prepare a Budgeted Balance Sheet for the end of Decembe

Solution

Schedule of Cash Receipts

November

December

Cash Sales

$    225,000.00

$       168,150.00

Cash Received Against Previous Month Credit Sales

$     74,000.00

$       112,500.00

Total Cash Receipts

$    299,000.00

$       280,650.00

Inventory Purchases Budget

November

December

Cost of Goods Sold

$                        -  

$    225,000.00

$       168,150.00

Opening Inventory

$    140,400.00

$         92,482.50

Closing Inventory Needed

$      92,482.50

$         98,555.60

Purchases (Balancing Figure)

$    177,082.50

$       174,223.10

Cash Budget

November

December

Opening Cash

$    16,000.00

$    56,044.00

Cash from sales and Accounts Receivables

$ 299,000.00

$ 280,650.00

Total Cash Available

$ 315,000.00

$ 336,694.00

Cash Disbursements

Cash paid for purchase of merchandise

$ 240,000.00

$ 177,082.50

Cash Expenses

$    18,956.00

$    18,956.00

Total Cash Disbursements

$ 258,956.00

$ 196,038.50

Closing Cash Balance

$    56,044.00

$ 140,655.50

Carribian Contraction Corporation

Budgeted Income Statement For November- December

Revenue

$                       655,250.00

Cost of Goods Sold

$                       393,150.00

Gross Profit

$                       262,100.00

Expenses

$                          37,912.00

Depreciation

$                          35,000.00

Bad Depts written off

$                          65,525.00

Net Profit

$                       123,663.00

Carribian Construction Corporation

Budgeted Balance Sheet at December

Assets

Accounts Receivable

$        84,075.00

Cash

$      140,655.50

Merchandise Inventory

$        98,555.60

Property plant and Equipment (net of Accumulated Depreciation $ 535000)

$ 1,031,000.00

Total Assets

$ 1,354,286.10

Liabilities and Equity

Accounts Payables

$      174,223.10

Common Stock

$      640,000.00

Retained earnings (416400+123663)

$      540,063.00

Total Liabilities and Equity

$ 1,354,286.10

Notes

1) Calculation of Accounts Receivables

December sales

$      280,250.00

Accounts Receivables--30% of December sale

84075

2) Calculation of Accounts Payable

Closing balance of Accounts payable is equal to purchases of december.

Schedule of Cash Receipts
		November	December
Cash Sales		$    225,000.00	$       168,150.00
Cash Received Against Previous Month Credit Sales		$     74,000.00	$       112,500.00
Total Cash Receipts		$    299,000.00	$       280,650.00