Concept Introduction:
Budgeted purchases:
Budgeted purchases are the estimates of purchases of a particular month based on the sales requirement and ending inventory requirement and the budgeted beginning inventory.
This is how we calculate budgeted purchases for a particular month.
Requirement:
To prepare:
Merchandise purchases budget for the months of April, May and June
Answer to Problem 29QS
Solution:
| Lexi Company | |||
| Merchandise purchases Budget (in Units) | |||
| For the Month of April, May and June | |||
| April | May | June | |
| Budgeted sales for the Month | 1,040,000 | 1,220,000 | 980,000 |
| Add: Ending inventory requirement | 366,000 | 294,000 | 306,000 |
| Total units required for the month | 1,406,000 | 1,514,000 | 1,286,000 |
| Less: Beginning inventory | 280,000 | 366,000 | 294,000 |
| Budgeted purchases | 1,126,000 | 1,148,000 | 992,000 |
Explanation of Solution
First, the ending inventory requirement is calculated
The ending inventory requirement is calculated as under -
The total requirement of the month is calculated.
- April = 1,040,000 units
- May =1,220,000 units
- June = 980,000 units
Ending inventory −
- April = 366,000, units
- May =294,000 units
- June = 306,000 units
Total requirement for April, May and June −
Now, the budgeted purchases will be calculated as under −
Given, beginning inventory −
- April = 280,000 units
- May = 366,000 units
- June = 294,000 units
Thus, the merchandise purchase budget has been purchased for the months of April, May and June.
Want to see more full solutions like this?
Chapter 22 Solutions
FUNDAMENTAL ACCT PRIN CONNECT ACCESS
- Quick answer of this accounting questionsarrow_forwardFor the year ended December 31, 2019, Settles Inc. earned an ROI of 9.9%. Sales for the year were $17 million, and the average asset turnover was 3.3. Average stockholders' equity was $2.3 million. Required: a. Calculate Settles Inc.'s margin and net income. b. Calculate Settles Inc.'s return on equity.arrow_forwardWhat is the estimated ending inventory on June 30 on these general accounting question?arrow_forward
- What would the ending inventory be ??arrow_forwardMCQarrow_forwardA manufacturing company applies overhead based on direct labor hours. At the beginning of the year, it was estimated that overhead costs would be $450,000 and direct labor hours would be 90,000. Actual overhead costs incurred were $459,000 and actual direct labor hours were 95,000. What is the amount of overapplied or underapplied overhead at the end of the year?arrow_forward
- Please solve this question general accountingarrow_forwardQ.no. 45-FINANCIAL ACCOUNTING: On March 1, 2016, E Corp. issued $2,700,000 of 15% nonconvertible bonds at 105, due on February 28, 2026. Each $2,500 bond was issued with 47 detachable stock warrants, each of which entitled the holder to purchase, for $65, one share of Evan's $40 par common stock. On March 1, 2016, the market price of each warrant was $8. By what amount should the bond issue proceeds increase shareholders' equity?arrow_forwardAnswer this financial accounting questionarrow_forward
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education