Question: Clark Inc a merchandising company has hired you to help

Clark, Inc., a merchandising company, has hired you to help it determine the amount and timing of purchases of office products for resale next year. The marketing function has forecasted sales of office products by quarter of $ 65,000; $ 75,000; $ 59,000; and $ 90,000 for next year. After examining last year’s accounting records, you determine that the cost of goods sold is 40 percent of sales. In the past, Clark has always maintained an ending inventory of 50 percent of next quarter’s expected cost of goods sold. How-ever, due to increasing storage costs, the company has decided to decrease ending inventories to 25 per-cent of the next quarter’s cost of goods sold, beginning with the first quarter of the planning period. Clark would like an ending inventory for the year of $ 9,000. After examining last year’s purchase invoices, you discovered that suppliers require payment within 30 days (i.e. within the quarter of purchase) but offer a cash discount of 3 percent for payments made within 10 days of purchase.
A. Prepare a purchases budget for each quarter of next year.
B. Prepare a cash disbursements schedule for each quarter of next year.

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  • CreatedMarch 25, 2015
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