Please explain how to calculate “Less Beginning Inventory” for February & March. 2. Complete the following:Merchandise Purchases BudgetBudgeted cost of goods soldAdd desired ending inventory.Total needs:Less beginning inventory.Required purchases*$70,000.sales x 70% = $49,000.$80,000 × 70% × 20% = $11,200.January February March Quarter.$49,000*11,200t60,2009,800$50,400 The following data relate to the operations of Picanuy Corporation, a wholesale distributor ofconsumer goods:a.b.C.d.e.f.g.h.Current assets as of December 31:Cash.Accounts receivableInventory..Buildings and equipment, net.Accounts payableCapital stock..Retained earnings.$6,000$36,000$9,800$110,885$32,550.$100,000.$30,135The gross margin is 30% of sales. (In other words, cost of goods sold is 70% of sales.)Actual and budgeted sales data are as follows:December (actual).January.February..March..April$60,000$70,000$80,000$85,000$55,000.Sales are 40% for cash and 60% on credit. Credit sales are collected in the month followingsale. The accounts receivable at December 31 are the result of December credit sales.Each month's ending inventory should equal 20% of the following month's budgeted cost ofgoods sold.One-quarter of a month's inventory purchases is paid for in the month of purchase; the otherthree-quarters is paid for in the following month. The accounts payable at December 31 arethe result of December purchases of inventory.Monthly expenses are as follows: commissions, $12,000; rent, $1,800; other expenses (exclud-ing depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is$2,400 for the quarter and includes depreciation on new assets acquired during the quarter.Equipment will be acquired for cash: $3,000 in January and $8,000 in February.Management would like to maintain a minimum cash balance of $5,000 at the end of eachmonth. The company has an agreement with a local bank that allows the company to borrowin increments of $1,000 at the beginning of each month, up to a total loan balance of $50,000.The interest rate on these loans is 1% per month, and for simplicity, we will assume that inter-est is not compounded. The company would, as far as it is able, repay the loan plus accumu-lated interest at the end of the quarter.moth

Beginning inventory is the inventory at the start of any period. For the start of the period, the…

2. Complete the following: Merchandise Purchases Budget Budgeted cost of goods sold Add desired ending inventory Total needs: Less beginning inventory Required purchases *$70,000.sales x 70% = $49,000. t$80,000 X 70% X 20% = $11,200. January February March Quarter $49,000* 11,200 60,200 9,800 $50,400

2. Complete the following: Merchandise Purchases Budget Budgeted cost of goods sold Add desired ending inventory Total needs: Less beginning inventory Required purchases $70,000.sales x 70% = $49,000. t$80,000 X 70% X 20% = $11,200. January February March Quarter $49,000 11,200 60,200 9,800 $50,400

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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