Question

Ahmed Company purchases all merchandise on credit. It recently budgeted the month-end accounts payable balances and merchandise inventory balances below. Cash payments on accounts payable during each month are expected to be May, $1,300,000; June, $1,500,000; July, $1,350,000; and August, $1,400,000

	Accounts Payable			Merchandise Inventory
May 31	$	120,000		$	250,000
June 30		120,000			500,000
July 31		300,000			200,000
August 31		110,000			380,000

(1) Compute the budgeted amounts of merchandise purchases. Budgeted amounts: June July August Ending accounts payable Payments on account Subtotal 0 0 0 Beginning accounts payable Purchases $0 $0 $0 (2) Compute the budgeted amounts of cost of goods sold. Budgeted amounts: June July August Beginning inventory Purchases Cost of goods available for sale Ending inventory (500,000) (200,000) (380,000) Cost of goods sold

Answer 1

Answer:

Budgeted Amounts	June	July	August
Ending Accounts payable	120000	300000	110000
Payment on account	1500000	1350000	1400000
Subtotal	1620000	1650000	1510000
Beginning Accounts payable	(120000)	(120000)	(300000)
Purchases	1500000	1530000	1210000
Budgeted Amounts	June	July	August
Beginning Inventory	250000	500000	200000
Purchases	1500000	1530000	1210000
Cost of goods available for sale	1750000	2030000	1410000
Ending Invenotry	(500000)	(200000)	(380000)
Cost of goods sold	1250000	1830000	1030000