Souter Oil Corporation, which distributes gasoline products to independent gasoline stations, had $480,000 of cost of goods

Question:

Souter Oil Corporation, which distributes gasoline products to independent gasoline stations, had $480,000 of cost of goods sold in January. The company expects a 2.5 percent increase in cost of goods sold during February. The balance for January is $40,000, and the desired for February is $50,000. Souter pays cash to settle 60 percent of its purchases on account during the month of purchase and pays the remaining 40 percent in the month following the purchase. The balance as of January 31 was $38,000.

Required
a. Determine the amount of purchases budgeted for February.
b. Determine the amount of cash payments budgeted for inventory purchases in February.

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