Ahmed Company purchases all merchandise on credit. It recently budgeted the month-end accounts payable balances and merchandise inventory balances below. Cash payments on accounts payable during each month are expected to be May, $1,300,000; June, $1,500,000; July, $1,350,000; and August, $1,400,000

	Accounts Payable			Merchandise Inventory
May 31	$	120,000		$	250,000
June 30		120,000			500,000
July 31		300,000			200,000
August 31		110,000			380,000

(1) Compute the budgeted amounts of merchandise purchases.
Budgeted amounts:	June	July	August
Ending accounts payable
Payments on account
Subtotal	0	0	0
Beginning accounts payable
Purchases	$0	$0	$0
(2) Compute the budgeted amounts of cost of goods sold.
Budgeted amounts:	June	July	August
Beginning inventory
Purchases
Cost of goods available for sale
Ending inventory	(500,000)	(200,000)	(380,000)
Cost of goods sold

Answer rating: 100% (QA)

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