Summit Company has budgeted purchases of merchandise inventory of $457,500 in January and $533,750 in February. Assume Summit pays for inventory purchases 40% in the month of the purchase and 60% in the month after purchase. The Accounts Payable balance on December 31 is $97,350. Prepare a schedule of cash payments for purchases for January and February. Cash Payments January February Total merchandise inventory purchases Cash Payments Merchandise Inventory: Dec.—Dec. 31 Accounts Payable, paid in Jan. Jan.—Jan. merchandise inventory purchases paid in Jan. Jan.—Jan. merchandise inventory purchases paid in Feb. Feb.—Feb. merchandise inventory purchases paid in Feb. Total payments for merchandise inventory
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Prepare a schedule of cash payments for purchases for January and February.
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