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Question - Green Company is preparing the budget for the second quarter. At the end of March, the balance in inventory was 20,000 units and accounts payable was $80,000.
The budgeted unit sales for the next four months are:
April 60,000
May 75,000
June 90,000
July 81,000
The purchase price per unit is $2 per unit. Purchases are paid 60% in the month of sale and 40% in the next month. The desired ending inventory policy is to have one-third of the units needed for the following months sales on hand at the end of each month.
Required - Show your work for ANY credit.
1. How many units should be purchased in April?
2. What are the cash disbursements expected in April?
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