Question

# Walker Company prepares monthly budgets. The current budget plans for a September ending merchandise inventory of...

Walker Company prepares monthly budgets. The current budget plans for a September ending merchandise inventory of 30,000 units. Company policy is to end each month with merchandise inventory equal to 15% of budgeted sales for the following month. Budgeted sales and merchandise purchases for the next three months follow. The company budgets sales of 200,000 units in October.

 Sales (Units) Purchases (Units) July 170,000 191,000 August 310,000 308,500 September 300,000 285,000

Prepare the merchandise purchases budgets for the months of July, August, and September.

 WALKER COMPANY Merchandise Purchases Budget For July, August, and September July August September Budgeted ending inventory units 30,000 Budgeted units sales for month 170,000 310,000 300,000 Required units of available inventory 330,000 Beginning inventory (units) Units to be purchased 191,000 308,500 285,000

 Calculation of units to be purchased July August September Budgeted ending inventory 46500 45000 30000 Add :Budgeted unit sales for the month 170000 310000 300000 Required unit of avilable inventory 216500 355000 330000 Less:Beginning invetory in units 25500 46500 45000 Units to be purchased 191000 308500 285000
 Explanations Particulars July August September Budgeted ending inventory (310000 x 15%) (300000 x 15%) 30000 46500 45000 Given in question Beginning invetory in units (170000 x 15%) (310000 x 15%) (300000 x 15%) 25500 46500 45000