Carmen Company sells jar candles. The sales forecast (units) for the coming months is: April May June July August 170 140 270 230 230 Each candle costs $11. The ending inventory policy is 40% of next month's sales needs. April 1 inventory will be as expected under the policy. Carmen pays for purchases 30% in the month of purchase and 70% the following month. Accounts payable on April 1 is $2,600. Required: a. Prepare a purchases budget for the quarter ending June 30, Note: Deductible values must be indicated with a minus sign.
Carmen Company sells jar candles. The sales forecast (units) for the coming months is: April May June July August 170 140 270 230 230 Each candle costs $11. The ending inventory policy is 40% of next month's sales needs. April 1 inventory will be as expected under the policy. Carmen pays for purchases 30% in the month of purchase and 70% the following month. Accounts payable on April 1 is $2,600. Required: a. Prepare a purchases budget for the quarter ending June 30, Note: Deductible values must be indicated with a minus sign.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Carmen Company sells jar candles. The sales forecast (units) for the coming months is
April
May
June
July
August
178
140
270
230
230
Each candle costs $11. The ending inventory policy is 40% of next month's sales needs. April 1 inventory will be as expected under the
policy. Carmen pays for purchases 30% in the month of purchase and 70% the following month. Accounts payable on April 1 is $2,600.
Required:
a. Prepare a purchases budget for the quarter ending June 30,
Note: Deductible values must be indicated with a minus sign.
Budgeted unit sales
Plus: Ending inventory
Less: Beginning inventory
Budgeted purchases (units))
Cost of merchandise (per unit)
Total cost of merchandise purchases
Merchandise Purchases Budget (Candles)
For the Quarter Ending June 30
April
May
b. Prepare a cash payments budget for the quarter ending June 30.
Budgeted merchandise purchases
Cash paid month of purchase (30%)
Cash paid in month following (70%)
Cash paid for merchandise purchases
Budgeted Cash Payments (Candles)
For the Quarter Ending June 30
April
May
June
June
Total
Total
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