Prepare purchases and cash budgets for july

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Question - Purchases and Cash Budgets - On July 1, MTC Wholesalers had a cash balance of $245,000 and accounts payable (related to inventory purchases) of $138,600. Actual sales for May and June, and budgeted sales for July, August, September, and October are:

Month

Actual Sales

Month

Budgeted Sales

May

$210,000

July

$126,000

June

224,000

August

112,000



September

140,000



October

168,000

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 $39,200 each month and are paid during the month incurred.

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

Reference no: EM133124205

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