Question

Green lighting supply plans inventory levels (at cost) at the end of each month as follows:...

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.

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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%
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