Big Sound, a merchandising company specializing in home computer speakers, budgets its monthly cost of goods sold to equal 70% of sales. Its inventory policy calls for ending inventory in each month to equal 20% of the next month’s budgeted cost of goods sold. All purchases are on credit, and 25% of the purchases in a month is paid for in the same month. Another 60% is paid for during the first month after purchase, and the remaining 15% is paid for in the second month after purchase. The following sales budgets are set: July, $ 350,000; August, $ 290,000; September, $ 320,000; October, $ 275,000; and November, $ 265,000. Compute the following:
(1) Budgeted merchandise purchases for July, August, September, and October;
(2) Budgeted payments on accounts payable for September and October;
(3) Budgeted ending balances of accounts payable for September and October.

  • CreatedNovember 29, 2013
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