Question

Young is a retailer of assorted baby products. The sales forecast for the coming months is:...

Young is a retailer of assorted baby products. The sales forecast for the coming months is:

Revenues
April $ 181,000
May $ 209,000
June $ 217,000
July $ 249,000
August $ 233,000



Young’s cost of sales averages 80% of revenues. The inventory policy is to carry 20% of next month’s sales needs. April 1 inventory will be as expected under the policy.

Young pays for purchases 70% in the month of purchase and 30% the following month. Accounts payable on April 1 is $24,400.

a. Prepare a purchases budget for as many months as is possible.
April May June July August
Sales
x 80% % % % % %
Cost of Sales
Ending Inv
Beginning Inv
Purchases




b. Prepare a cash payments budget for April through July.
April May June July
From This Month
From Last Month
Cash Payments
Business   Accounting   
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