Question

On July 1, MTC Wholesalers had a cash balance of $245,000 and accounts payable of $138,600. Actual sales for May and June, and budgeted sales for July, August, September, and October are:

Month	Actual Sales	Month	Budgeted Sales
May	$210,000	July	$ 126,000
June	224,000	August	112,000
		September	140,000
		October	168,000

All sales are on credit with 75 percent collected during the month of sale, 20 percent collected during the next month, and 5 percent collected during the second month following the month of sale. Cost of goods sold averages 70 percent of sales revenue. Ending inventory is one-half of the next month's predicted cost of sales. The other half of the merchandise is acquired during the month of sale. All purchases are paid for in the month after purchase. Operating costs are estimated at $39,200 each month and are paid during the month incurred.

Required
Prepare purchases and cash budgets for July, August, and September.

Do not use a negative sign with your answers.

MTC Wholesalers
Purchases Budget
For the Months of July, August, and September
		July	August	September
Inventory required, current sales		$Answer	$Answer	$Answer
Desired ending inventory		Answer	Answer	Answer
Total inventory needs		Answer	Answer	Answer
Less beginning inventory		Answer	Answer	Answer
Purchases		$Answer	$Answer	$Answer

Do not use a negative sign with your answers.

MTC Wholesalers
Cash Budget
For the Months of July, August, and September
		July	August	September
Cash balance, beginning		$Answer	$Answer	$Answer
Cash receipts
Current month's sales		Answer	Answer	Answer
Previous month's sales		Answer	Answer	Answer
Sales two months prior		Answer	Answer	Answer
Total receipts		Answer	Answer	Answer
Cash available		Answer	Answer	Answer
Cash disbursements:
Purchases		Answer	Answer	Answer
Operating costs		Answer	Answer	Answer
Total disbursements		Answer	Answer	Answer
Cash balance, ending		$Answer	$Answer

Answer 1

MTC Wholesalers
Purchases Budget
For the month of July, August and September				Comments
	July	August	September
Sales	126000	112000	140000	Budget Sales
Inventory required, current Sale	88200	78400	98000	70% of the Sales
Desired ending Inventory	39200	49000	84000	1/2 of the next month's predicted Cost off Sales
Total Inventory needs	127400	127400	182000
Less Beginning inventory	44100	39200	49000	1/2 of the inventory required for current sale.
Purchases	83300	88200	133000

MTC Wholesalers

Cash Budget

	July	August	September
Cash Balance	245000	233100	231000
Cash Receipts
Current Month Sales	94500	84000	105000	75% of the current month Sales
Previous month Sales	44800	25200	22400	20% of the last month's sale
Sales two month Prior	10500	11200	6300	5% of sales two month prior
Total Receipts	149800	120400	133700
Cash disbursements
Purchases	122500	83300	88200	Last month's purchase
Operating Cost	39200	39200	39200	Estimated 39200 every month
Total Disbursement	161700	122500	127400
Cash Balance ending	233100	231000	237300