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Question - Company "B" operates a retail business. Purchases are sold at cost plus 25%. The management team are preparing the cash budget and have gathered the following data:
i) The budget sales are as follows:
Month
January 90
February 100
March 80
April 120
ii) It is management policy to hold inventory at the end each month which is enough to meet the sales demand for the next half month. Sales are budgeted to occur evenly during each month.
iii) Creditors are paid one month after the purchase has been made
Required - Calculate the entries for purchases that will be shown for February, March and April.
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