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any's cost of goods sold iS consistently of the next month's budgeted cost of a month is paid for in that month. Anot ng the second month after purchase. E 命つro0o

any's cost of goods sold iS consistently of the next month's budgeted cost of a month is paid for in that month. Anot ng the second month after purchase. E 命つro0o

FINANCIAL ACCOUNTING
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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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: August September October November Budgeted ending inventory 76,800 $ 57,600 $ 86,400 Cost of goods sold (estimated) 320,000 256,000 192,000 Required available inventory 396,800 313,600 278,400 Budgeted beginning inventory (96,000) (76,800) (57,600) Required purchases 2$ 300,800 $ 236,800 $ 220,800 Calculate Payments Made for Inventory: Purchases paid in Purchases August September October After October August purchases 24 300,800 $ 180,480 $ 902,440 $ 30,080 $ -812,200 September purchases 236,800 142,080 71,040 $ 23,680 %24
Transcribed Image Text: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: August September October November Budgeted ending inventory 76,800 $ 57,600 $ 86,400 Cost of goods sold (estimated) 320,000 256,000 192,000 Required available inventory 396,800 313,600 278,400 Budgeted beginning inventory (96,000) (76,800) (57,600) Required purchases 2$ 300,800 $ 236,800 $ 220,800 Calculate Payments Made for Inventory: Purchases paid in Purchases August September October After October August purchases 24 300,800 $ 180,480 $ 902,440 $ 30,080 $ -812,200 September purchases 236,800 142,080 71,040 $ 23,680 %24
Calculate Monthly Purchases: August September October November Budgeted ending inventory 76,800 $ 57,600 $ 86,400 Cost of goods sold (estimated) 320,000 256,000 192,000 Required available inventory 396,800 313,600 278,400 Budgeted beginning inventory (96,000) (76,800) (57,600) Required purchases 300,800 $ 236,800 $ 220,800 Calculate Payments Made for Inventory: Purchases paid in --- --- es Purchases August September October After October August purchases 2$ 300,800 2$ 180,480 2$ 902,440 $ 30,080 $ -812,200 September purchases 236,800 142,080 71,040 $ 23,680 October purchases 220,800 132,480 $ 88,320 2$ 180,480 2$ 1,044,520 $ 233,600 $ -700,200 Determine October's Expected Cash Payments for Purchases. October's expected cash payments for purchases 2$ 233,600 %24 %24
Transcribed Image Text:Calculate Monthly Purchases: August September October November Budgeted ending inventory 76,800 $ 57,600 $ 86,400 Cost of goods sold (estimated) 320,000 256,000 192,000 Required available inventory 396,800 313,600 278,400 Budgeted beginning inventory (96,000) (76,800) (57,600) Required purchases 300,800 $ 236,800 $ 220,800 Calculate Payments Made for Inventory: Purchases paid in --- --- es Purchases August September October After October August purchases 2$ 300,800 2$ 180,480 2$ 902,440 $ 30,080 $ -812,200 September purchases 236,800 142,080 71,040 $ 23,680 October purchases 220,800 132,480 $ 88,320 2$ 180,480 2$ 1,044,520 $ 233,600 $ -700,200 Determine October's Expected Cash Payments for Purchases. October's expected cash payments for purchases 2$ 233,600 %24 %24
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