Hardy Company's cost of goods sold is consistently 70% 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 45% is paid for during the first month after purchase, and the remaining 5% is paid for during the second month after purchase. Expected sales are August (actual). $395,000; September (actual), $350,000; October (estimated). $290,000; and November (estimated), $360,000. Use this information to determine October's expected cash payments for purchases. Calculate Monthly Purchases: Budgeted ending inventory Required available inventory Required purchases Calculate Payments Made for Inventory: August purchases September purchases October purchases Purchases 0 $ August August Determine October's Expected Cash Payments for Purchases. October's expected cash payments for purchases September 0$ 0 $ September October Purchases paid in t October November After October

Hardy Company's cost of goods sold is consistently 70% 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 45% is paid for during the first month after purchase, and the remaining 5% is paid for during the second month after purchase. Expected sales are August (actual). $395,000; September (actual), $350,000; October (estimated). $290,000; and November (estimated), $360,000. Use this information to determine October's expected cash payments for purchases. Calculate Monthly Purchases: Budgeted ending inventory Required available inventory Required purchases Calculate Payments Made for Inventory: August purchases September purchases October purchases Purchases 0 $ August August Determine October's Expected Cash Payments for Purchases. October's expected cash payments for purchases September 0$ 0 $ September October Purchases paid in t October November After October

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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