Refer to 3-24. Jaime’s business policy is to plan to end each month with an ending inventory equal to 20 per cent of the next month’s projected sales. Jaime’s pays $8 for each hat that it purchases. Jaime’s and its supplier have an arrangement that allows Jaime’s to pay for each purchase 60 days after the purchase.

Required:

Prepare a purchases budget for the second quarter of this financial year for Jaime’s Hat Shop.

Question 3-24

Jaime’s Hat Shop sells hats with school logos on them for $22 each. This year, Jaime’s expects to sell 350 hats in August, 300 in September, 400 in October, 800 in November, 1040 in December and 750 in January. On average, 25 per cent of customers purchase on credit. Jaime’s allows those customers to pay for their purchases the month after they have made their purchases.