Solved by verified expert :Hardy
Company’scost of goods sold is
consistently 60% of sales.
The company plans to carry
ending merchandise inventory for each month equal to 20% of the next month’s
budgeted cost of good sold. All merchandise is purchased on credit, and 50% of
the purchases made during a month is paid for in that month. Another 35% is
paid for during the first month after purchase, and the remaining 15% is paid
for during the second month after purchase. Expected sales are: August
(actual), $325,000; September (actual), $320,000; October (estimated),
$250,000; November (estimated), $310,000.
Use
this information to determine October’s expected cash payments for purchases.
Calculate
monthly purchases & calculate payments made for inventory.
