Problem

Sand Dollar Company purchases all merchandise on credit. It recently budgeted the followin...

Sand Dollar Company purchases all merchandise on credit. It recently budgeted the following month-end accounts payable balances and merchandise inventory balances. Cash payments on accounts payable during each month are expected to be: May, $1,300,000; June, $1,450,000; July, $1,350,000; and August, $1,400,000. Use the available information to compute the budgeted amounts of (1) merchandise purchases for June, July, and August and (2) cost of goods sold for June, July, and August.

 

Accounts Payable

Merchandise Inventory

May 31

$120,000

$250,000

June 30

170,000

400,000

July 31

200,000

300,000

August 31

160,000

330,000

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