carol s cookies has the following information pertaining to the capital expenditures 1571401

Carol’s Cookies has the following information pertaining to the capital expenditures and cash budgets.

Capital Expenditures

The company plans to purchase selling and administrative equipment totaling $20,000 and production equipment totaling $28,000. Both will be purchased at the end of the fourth quarter and will not affect depreciation expense for the coming year.

Cash Budget

All sales are on credit. The company expects to collect 70 percent of sales in the quarter of sale, 25 percent of sales in the quarter following the sale, and 5 percent will not be collected (bad debt). Accounts receivable at the end of last year totaled $200,000, all of which will be collected in the first quarter of this coming year. All direct materials purchases are on credit. The company expects to pay 80 percent of purchases in the quarter of purchase and 20 percent the following quarter.

Accounts payable at the end of last year totaled $50,000, all of which will be paid in the first quarter of this coming year. The cash balance at the end of last year totaled $20,000.

1. Prepare a capital expenditures budget for Carol’s Cookies using the format shown in Figure 9.10 “Capital Expenditures Budget for Jerry’s Ice Cream”.