Ahmed Company purchases all merchandise on credit. It recently budgeted the month-end accounts payable balances...
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Accounting
Ahmed Company purchases all merchandise on credit. It recently budgeted the month-end accounts payable balances and merchandise inventory balances below. Cash payments on accounts payable during each month are expected to be May, $1,400,000; June, $1,400,000; July, $1,400,000; and August, $1,500,000
Accounts Payable
Merchandise Inventory
May 31
$
180,000
$
230,000
June 30
190,000
300,000
July 31
200,000
500,000
August 31
120,000
400,000
(1) Compute the budgeted amounts of merchandise purchases.
Budgeted amounts:
June
July
August
Ending accounts payable
Payments on account
Subtotal
0
0
0
Beginning accounts payable
Purchases
$0
$0
$0
(2) Compute the budgeted amounts of cost of goods sold.
Budgeted amounts:
June
July
August
Beginning inventory
Purchases
Cost of goods available for sale
Ending inventory
(300,000)
(500,000)
(400,000)
Cost of goods sold
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