Posted: July 19th, 2016

Compute the budgeted merchandise purchases ???

7-28
Ronoco Products, a wholesaler of fishing equipment, budgeted the following sales for the indicated months:

June 20X8 July 20X8 August 20X8
Sales on account $1,820,000 $1,960,000 $2,100,000
Cash sales 280,000 240,000 260,000
Total sales $2,100,000 $2,200,000 $2,360,000

All merchandise is marked up to sell at its invoice cost plus 25%. Target merchandise inventories at the beginning of each month are 30% of that month’s projected cost of goods sold.
1. Compute the budgeted cost of goods sold for the month of June 20X8
2. Compute the budgeted merchandise purchases for July 20X8.

7-37
Prepare a statement of estimated cash receipts and disbursements for October 20X7 for the Botanica Company, which sells one product, herbal soap, by the case. On October 1, 20X7, part of the trial balance showed the following:
DR CR
Cash $4,800
Accounts receivable 15,600
Allowance for bad debts $1,900
Merchandise inventory 9,000
Accounts payable, merchandise 6,600

The company pays for its purchases within 10 days of purchase so assume that one-third of the purchases of any month are due and paid for in the following month. The cost of the merchandise purchased is $12 per case. At the end of each month, it is desired to have an inventory equal in units to 50% of the following month’s sales in units. Sales terms include a 1% discount if payment is made by the end of the calendar month. Past experience indicates that 60% of sales will be collected during the month of the sale, 30% in the following calendar month, 6% in the next following calendar month, and the remaining 4% will be uncollectible. The company’s fiscal year begins August 1.