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Homework answers / question archive / Wonderful Technology Company Limited sells computers and accessories
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 $49,000 Accounts payable $190,000 • Ignore taxes. • There are inventories at end of November. Required: Use this table format (at least 5 columns) for part a. and bi. Item % working % working Dec 2019 Jan 2020 Amount ($) 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)
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