Question

Green lighting supply plans inventory levels (at cost) at the end of each month as follows: May, $271,000; June, $226,000; July, $209,000; and August, $241,000.

Sales are expected to be June, $449,000; July, $359,000; and August, $306,000. Cost of goods sold is 65% of sales.

Purchases in April were $258,000 and in May they were $188,000. Payments for each month’s purchases are made as follows: 15% during that month, 70% the next month, and the final 15% the next month.

Prepare budge schedules for June, July, and August for purchases and for disbursements for purchases.

Answer 1

* Requirements

--Schedule for Purchases

		June	Jul	Aug
A = Sales x 65%	Cost of Goods Sold	$291,850.00	$233,350.00	$198,900.00
B	Ending Inventory	$226,000.00	$209,000.00	$241,000.00
C	Less: Beginning Inventory	$271,000.00	$226,000.00	$209,000.00
D = A+B - C	Amount to be purchased	$246,850.00	$216,350.00	$230,900.00

--Schedule for Payments made for purchase

	June	Jul	Aug
Cash payments made for purchases in:
April	$38,700.00
May	$131,600.00	$28,200.00
June	$37,027.50	$172,795.00	$37,027.50
Jul		$32,452.50	$151,445.00
Aug			$34,635.00
Total	$207,327.50	$233,447.50	$223,107.50

--Working

Cash payments made for purchases in:
April	=258000*15%
May	=188000*70%	=188000*15%
June	=246850*15%	=246850*70%	=246850*15%
Jul		=216350*15%	=216350*70%
Aug			=230900*15%