Question

On July 1, MTC Wholesalers had a cash balance of $245,000 and accounts payable of $138,600. Actual sales for May and June, and budgeted sales for July, August, September, and October are: Month Actual Sales Month Budgeted Sales May $210,000 July $ 126,000 June 224,000 August 112,000 September 140,000 October 168,000 All sales are on credit with 75 percent collected during the month of sale, 20 percent collected during the next month, and 5 percent collected during the second month following the month of sale. Cost of goods sold averages 70 percent of sales revenue. Ending inventory is one-half of the next month's predicted cost of sales. The other half of the merchandise is acquired during the month of sale. All purchases are paid for in the month after purchase. Operating costs are estimated at $39,200 each month and are paid during the month incurred. Required Prepare purchases and cash budgets for July, August, and September. Do not use a negative sign with your answers. MTC Wholesalers Purchases Budget For the Months of July, August, and September July August September Inventory required, current sales $ Answer $ Answer $ Answer Desired ending inventory Answer Answer Answer Total inventory needs Answer Answer Answer Less beginning inventory Answer Answer Answer Purchases $ Answer $ Answer $ Answer Do not use a negative sign with your answers. MTC Wholesalers Cash Budget For the Months of July, August, and September July August September Cash balance, beginning $ Answer $ Answer $ Answer Cash receipts Current month's sales Answer Answer Answer Previous month's sales Answer Answer Answer Sales two months prior Answer Answer Answer Total receipts Answer Answer Answer Cash available Answer Answer Answer Cash disbursements: Purchases Answer Answer Answer Operating costs Answer Answer Answer Total disbursements Answer Answer Answer Cash balance, ending $ Answer $ Answer $ Answer

Answer 1

Purchases Budget
	July	August	September
Inventory required, current sales	88200	78400	98000
Desired ending inventory	39200	49000	58800
Total inventory needs	127400	127400	156800
Less beginning inventory	44100	39200	49000
Purchases	83300	88200	107800

Cash Budget
	July	August	September
Cash balance, beginning	245000	272300	265299
Cash receipts
Current month's sales	94500	84000	105000
Previous month's sales	44800	25200	28000
Sales two months prior	10500	11200	6300
Total receipts	149800	120400	139300
Cash available	394800	392700	404599
Cash disbursements:
Purchases	83300	88200	107800
Operating costs	39200	39201	39202
Total disbursements	122500	127401	147002
Cash balance, ending	272300	265299	257597