Hardy Company's cost of goods sold is consistently 70% of sales. The company plans to...
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Hardy Company's cost of goods sold is consistently 70% of sales. The company plans to carry ending merchandise inventory for each month equal to 30% of the next month's budgeted cost of goods sold. All merchandise is purchased on credit, and 40% of the purchases made during a month is paid for in that month. Another 45% is paid for during the first month after purchase, and the remaining 15% is paid for during the second month after purchase. Expected sales are: August (actual), $395,000; September (actual), $330,000; October (estimated), $330,000; November (estimated), $340,000 Use this information to determine October's expected cash payments for purchases. alculate monthly purchases: August September October November Budgeted ending inventory Cost of goods sold (estimated) Required available inventory udgeted beginning inventory Required purchases o s Calculate payments made for inventory: Purchases paid in September Purchases August October After October August purchases September purchases October purchases Determine October's expected cash payments for purchases Octobers expected cash payments for purchases
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