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Prepare a merchandise purchases budget

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Reference no: EM132803356

Problem - At March 31 COVID 20, a merchandising firm, had an inventory of 38,000 units, and it had accounts receivable totaling $85,000. Sales, in units, have been budgeted as follows for the next four months:

April 60,000

May 75000

June 90,000

July 81,000

The Comapny's board of directors has established a policy to commence in April that the inventory at the end of each month should contain 30% of the units required for the following month's budgeted sales.

The selling price is $2 per unit, two-third of sales are paid for by customers in the month of the sale, the balance is collected in the following month.

Required -

a. Prepare a merchandise purchases budget showing how many units should be purchased for each of the months April, May, and June.

b. Prepare a schedule of expected cash collections for each of the months April, May, and June.

Reference no: EM132803356

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