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Assume that a company prepared the following sales budget:
| | | | | | | | |
| September | $ | 600,000 | | November | $ | 800,000 | |
| October | $ | 750,000 | | December | $ | 900,000 | |
| |
The following information is also available:
- Desired ending inventory is $20,000 plus 70% of the next months cost of goods sold.
- Cost of goods sold is always 60% of sales.
- Merchandise purchases are paid 30% in the current month and 70% in the next month.
- Budgeted sales each month are 70% credit and 30% cash.
- 40% of credit customers pay in the current month, 50% pay in the first month after the sale, and 10% pay in the second month after the sale.
What are the expected cash disbursements for merchandise purchases for October?
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