Payne Company provided the following information relevant to its inventory sales and purchases for December Year 1 and the first quarter of Year 2: Cost of goods sold Dec. Year 1 (Actual) $60,000 Jan. Year 2 Feb. Year 2 Mar. Year 2 (Budgeted) $120,000 (Budgeted) $ 160,000 (Budgeted) $100,000 Desired ending inventory levels are 25% of the following month's projected cost of goods sold. The company purchases all inventory on account. January Year 2 budgeted purchases are $190,000. The normal schedule for inventory payments is 60% payment in month of purchase and 40% payment in month following purchase. Budgeted cash payments for inventory in February Year 2 would be:
Payne Company provided the following information relevant to its inventory sales and purchases for December Year 1 and the first quarter of Year 2: Cost of goods sold Dec. Year 1 (Actual) $60,000 Jan. Year 2 Feb. Year 2 Mar. Year 2 (Budgeted) $120,000 (Budgeted) $ 160,000 (Budgeted) $100,000 Desired ending inventory levels are 25% of the following month's projected cost of goods sold. The company purchases all inventory on account. January Year 2 budgeted purchases are $190,000. The normal schedule for inventory payments is 60% payment in month of purchase and 40% payment in month following purchase. Budgeted cash payments for inventory in February Year 2 would be:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Payne Company provided the following information relevant to its inventory sales and purchases for December Year 1 and the first quarter of Year 2:
Cost of goods
sold
Dec. Year
1
(Actual)
$60,000
Jan. Year 2 Feb. Year 2 Mar. Year 2
(Budgeted)
$ 120,000
(Budgeted)
$ 160,000
(Budgeted)
$ 100,000
Desired ending inventory levels are 25% of the following month's projected cost of goods sold. The company purchases all inventory on account.
January Year 2 budgeted purchases are $190,000. The normal schedule for inventory payments is 60% payment in month of purchase and 40% payment
in month following purchase.
Budgeted cash payments for inventory in February Year 2 would be:
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