Answer Happy

equal to 20% of the next month's budgeted cost of goods sold. All merchandise is purchased on credit, and 50% of the purchases made during a month is paid for in that month. Another 35% is paid for during the first month after purchase, and the remaining 15% is paid for during the second month after purchase. Expected sales are August (actual), $325,000; September (actual), $320,000; October (estimated), $250,000; and November (estimated), $310,000. Use this information to determine October's expected cash payments for purchases. Calculate Monthly Purchases: Budgeted ending inventory Cost of goods sold (estimated) Required available inventory Budgeted beginning inventory Required purchases Calculate Payments Made for Inventory: August purchases September purchases October purchases $ 0 August 195,000 Purchases. August September October 0 $ 192,000 Determine October's Expected Cash Payments for Purchases. October's expected cash payments for purchases 0 $ 150,000 0 -Purchases paid in... September November October After October

Hardy Company's cost of goods sold is consistently 60% of sales. The company plans ending merchandise inventory for each month equal to 20% of the next month's budgeted cost of goods sold. All merchandise is purchased on credit, and 50% of the purchases made during a month is paid for in that month. Another 35% is paid for during the first month after purchase, and the remaining 15% is paid for during the second month after purchase. Expected sales are August (actual), $325,000; September (actual), $320,000; October (estimated), $250,000; and November (estimated), $310,000. Use this information to determine October's expected cash payments for purchases. Calculate Monthly Purchases: Budgeted ending inventory Required available inventory Required purchases Calculate Payments Made for Inventory: August purchases September purchases October purchases August September Purchases August October -Purchases paid in September Determine October's Expected Cash Payments for Purchases. October's expected cash payments for purchases November October After October

Calculation Calculate the budgeted cash receipts and cash payments. Inc Stmt Bal Sheet Credit sales from: May June July Totals Purchases from: June July Totals $ $ $ Calculation of Cash Receipts From Sales -Collected in- $ Total Sales 1,720,000 1,200,000 1,400,000 4,320,000 $ 516,000 May Total Purchases $ 516,000 700,000 750,000 1,450,000 Calculation of Cash Payments for Merchandise -Paid in- June 0 0 June 0 $ 420,000 <Calculation $ 860,000 $ 360,000 $ 1,220,000 0 July $ 420,000 $ 280,000 450,000 $ 730,000 + 344,000 600,000 420,000 $ 1,364,000 July July 31 Accounts Pay. $ 0 300,000 $ 300,000 Inc Stmt Bal Sheet > July 31 Accounts Rec. 0 240,000 980,000 $ 1,220,000

Sales Cost of goods sold Gross profit Operating expenses: Salaries expense ACCO CO. Budgeted Income Statement For Month Ended July 31 Depreciation expense Bank loan interest expense Other cash expenses Total operating expenses Income before taxes. Income tax expense Net income ACCO CO. Budgeted Balance Sheet As of July 31 285,000 36,000 6,600 200,000 $ 1,400,000 770,000 630,000 527,600 102,400 30,720 $ 71,680

Assets Cash Accounts receivable Inventory Total current assets Equipment Accumulated depreciation Equipment, net Total assets Liabilities and Equity Liabilities Accounts payable Salaries payable Income taxes payable Total current liabilities Bank loan payable Total liabilities Stockholders' Equity Common stock Retained earnings Total Stockholders' equity ACCO CO. Budgeted Balance Sheet As of July 31 $ 122,400 1,220,000 60,000 1,600,000 (316,000) $ 300,000 60,000 30,720 600,000 1,035,680 1,402,400 1,284,000 $ 2,686,400 390,720 660,000 1,050,720 1,635,680

Accounts payable Salaries payable Income taxes payable Total current liabilities Bank loan payable Total liabilities Stockholders' Equity Common stock Retained earnings Total Stockholders' equity Total Liabilities and Equity ✓ 300,000 60,000 30,720 600,000 ♥ 1,035,680 390,720 660,000 1,050,720 1,635,680 $ 2,686,400