Question

Ahmed Company purchases all merchandise on credit. It recently budgeted the following month-end accounts payable balances...

Ahmed Company purchases all merchandise on credit. It recently budgeted the following month-end accounts payable balances and merchandise inventory balances. Cash payments on accounts payable during each month are expected to be: May, $1,400,000; June, $1,400,000; July, $1,250,000; and August, $1,300,000

Accounts
Payable
Merchandise Inventory
May 31 $ 180,000 $ 250,000
June 30 160,000 300,000
July 31 300,000 400,000
August 31 180,000 300,000
(1) Compute the budgeted amounts of merchandise purchases.
Budgeted amounts: June July August
Ending accounts payable
Payments on account
Subtotal 0 0 0
Beginning accounts payable
Purchases $0 $0 $0
(2) Compute the budgeted amounts of cost of goods sold.
Budgeted amounts: June July August
Beginning inventory
Purchases
Cost of goods available for sale
Ending inventory (300,000) (400,000) (300,000)
Cost of goods sold

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