Calculate estimated cash payments in October and November

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Question - In September 2021 the management of the Yancey Group assembles the following data in preparation of the budget for the months of October and November 2021.

1. Expected Sales for 2021;

October $1,000,000

November 1,400,000

December 1,800,000

2. Purchases for August and September 2021 were $850,000 and $720,000 respectively.

3. Cost of Sales is expected to be 60% of sales.

4. Desired ending inventory is 25% of the next month's cost of goods sold.

5. Yancey Group pays for 60% of its purchases in the month of purchase, 30% in the following month and 10% in the second following month.

Required -

a) Prepare the purchase budget for October and November of 2021.

b) Calculate the estimated cash payments in October and November for inventory purchased.

Reference no: EM133078448

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