Question

lehine from the information given. 26. Richards Company sells cellular phone accessorie for July, August, September, and October. or phone accessories. The marketing director developed the following cost of goods sold be July August September October Budgeted cost of goods sold $85,000 $92,000 $79,000 $88,000 Richards had a beginning inventory balance of $17,000 on July 1 and a beginning balance in Accounts Payable of $19,490. The company desires to maintain an ending inventory balance equal to 20 percent of the next period's cost of goods sold. Richards makes all purchases on account. The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the month following purchase. Required a. Prepare an inventory purchases budget for July, August, and September. July August September Budgeted COGS Plus Desired Ending Inventory Total Inventory Needed Less Beginning Inventory Required Purchases

Answer 1

Solution:

Inventory Purchase Budget
Particulars	July	August	September	Total
Budgeted Cost of goods sold	$85,000.00	$92,000.00	$79,000.00	$256,000.00
Add: Desired ending merchandise inventory	$18,400.00	$15,800.00	$17,600.00	$17,600.00
Total inventory needed	$103,400.00	$107,800.00	$96,600.00	$273,600.00
Less: Beginning Inventory	$17,000.00	$18,400.00	$15,800.00	$17,000.00
Required purchases	$86,400.00	$89,400.00	$80,800.00	$256,600.00