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Campbell Company, which sells electric razors, had $330,000 of cost of goods sold during the month...

Campbell Company, which sells electric razors, had $330,000 of cost of goods sold during the month of June. The company projects a 9 percent increase in cost of goods sold during July. The inventory balance as of June 30 is $35,000, and the desired ending inventory balance for July is $36,000. Campbell pays cash to settle 75 percent of its purchases on account during the month of purchase and pays the remaining 25 percent in the month following the purchase. The accounts payable balance as of June 30 was $40,000. Required Determine the amount of purchases budgeted for July. Determine the amount of cash payments budgeted for inventory purchases in July.

a. Budgeted purchases?

b.cash payments?

Business   Accounting   
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Answer #1
Answer

a.
Amount of purchases budgeted for July:
Cost of goods Sold $      359,700 330000*1.09
Add: Desired Ending Inventory $        36,000
Less: Beginning Inventory $        35,000
Budgeted purchases for July $      360,700
b.
Cash payments for July budgeted purchases:
Payment for June purchases $        40,000
Payment for July purchases $      270,525 360700*75%
Total cash payments $      310,525
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