1 answer

120 3O000 S0.000 Po 60 556 834 Arpated un-salesBEsales WACM In arrency Margsafin un. Kun Sal....

Question:

120 3O000 S0.000 Po 60 556 834 Arpated un-salesBEsales WACM In arrency Margsafin un. Kun Sal. pine 5 Mix 7 625 7 Mix NC 3 5%

120 3O000 S0.000 Po 60 556 834 Arpated un-salesBEsales WACM In arrency Margsafin un. Kun Sal. pine 5 Mix 7 625 7 Mix NC 3 5% 2 25 331.25 300 30oun Poo 550 PROBLEM 4 (10 pints) The sales budget of Hickory Company for the third quarter of 2018 is as follows: July $96,000 Sales August $72,000 September $108,000 Sales are 20% cash, 80 % credit. Cost of goods sold is 70% of total sales. Desired ending inventory for each month is equal to 25% of cost of goods sold for the following month. Collections on credit sales are as follows: 50% in the month of sale 30% in the month following sale 15% in the second month following sale 5% uncollectible July 1 inventory is $16,000. Expected sales for October are $84,000 Payments for inventory are 70% in the month following purchase and 30 % two months following purchase. Prepare the purchases budget for July, August, and September

Answers

Solution

Purchases Budget
July August September
Cost of goods sold $          67,200 $          50,400 $             75,600
Plus: Desired ending inventory $          12,600 $          18,900 $             14,700*
Total Inventory required $          79,800 $          69,300 $             90,300
Less: Beginning inventory $          16,000 $          12,600 $             18,900
Purchases $          63,800 $          56,700 $             71,400

*58,800 x 25%

.Working

July August September October
Sales $    96,000.00 $    72,000.00 $     108,000.00 $    84,000.00
Cost of goods sold (70% of above) $    67,200.00 $    50,400.00 $       75,600.00 $    58,800.00
.

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