On July 1, MTC Wholesalers had a cash balance of $262,500 and accounts payable (related to inventory purchases) of $148,500. Actual sales for May and June, and budgeted sales for July, August, September, and October are:
 

Month	Actual Sales	Month	Budgeted Sales
May	$225,000	July	$ 135,000
June	240,000	August	120,000
		September	150,000
		October	180,000

 

All sales are on credit with 75 percent collected during the month of sale, 20 percent collected during the next month, and 5 percent collected during the second month following the month of sale. Cost of goods sold averages 70 percent of sales revenue. Ending inventory is one-half of the next month's predicted cost of sales. The other half of the merchandise is acquired during the month of sale. All purchases are paid for in the month after purchase. Operating costs are estimated at $42,000 each month and are paid during the month incurred.
 

Required 
Prepare purchases and cash budgets for July, August, and September.

Do not use a negative sign with your answers.
 

MTC Wholesalers
Purchases Budget
For the Months of July, August, and September
		July	August	September
Inventory required, current sales
Desired ending inventory
Total inventory needs
Less beginning inventory
Purchases

 

Do not use a negative sign with your answers.

MTC Wholesalers
Cash Budget
For the Months of July, August, and September
		July	August	September
Cash balance, beginning
Cash receipts
Current month's sales
Previous month's sales
Sales two months prior
Total receipts
Cash available
Cash disbursements:
Purchases
Operating costs
Total disbursements
Cash balance, ending

Answer rating: 100% (QA)

To prepare the purchases and cash budgets for MTC Wholesalers for the months of July August and September we need to calculate the following Purchases Budget Calculate the inventory required for curre... View the full answer