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Sam Company, which sells luxury goods, had $350,000 of cost of goods sold during the month of January. The company projects a 7 percent increase in cost of goods sold during February. The inventory balance as of January 31 is $85,000, and the desired ending inventory balance for February is $62,000. Sam must pay cash to settle at least 40 percent of its purchases on account during the month of purchase and pays the remaining 60 percent in the month following the purchase. The accounts payable balance as of January 30 was $190,000.
Required
Sollution a | |
Amount of purchases budgeted for February.-Sam Company | |
Particulars | February |
Projected Cost of good sold (($350000+($350000*7%) | $374,500.00 |
Add: Desired ending inventory(given) | $62,000.00 |
Less: beginning inventory(given) | $85,000.00 |
Cost of raw material to be purchased | $351,500.00 |
Sollution a | |
Schedule of expected amount of cash payments budgeted for inventory purchases in February. | |
Particulars | February |
Accounts Payable beginning-31st january | $190,000.00 |
February Purchase($351500*40%) | $140,600.00 |
Total cash payments | $330,600.00 |
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