Jordan Company, which sells electric razors, had $370,000 of cost of goods sold during the month...

Jordan Company, which sells electric razors, had $370,000 of cost of goods sold during the month of June. The company projects a 7 percent increase in cost of goods sold during July. The inventory balance as of June 30 is $29,000, and the desired ending inventory balance for July is $30,000. Jordan pays cash to settle 75 percent of its purchases on account during the month of purchase and pays the remaining 25 percent in the month following the purchase. The accounts payable balance as of June 30 was $39,000.

Required

Determine the amount of purchases budgeted for July.
Determine the amount of cash payments budgeted for inventory purchases in July.

A. Budgeted Purchases

B. Cash Payments

Solutions

Expert Solution

Calculation of Budgeted Purchases
Cost of Goods Sold	395,900
Add: Desired Ending Balance	30,000
Total required	425,900
Less: Beginning Inventory	29,000
Budgeted Purchases	396,900


Calculation of budgeted cash payments
Budgeted Purchases	396,900
75% in Same month	297,675
Accounts payable	39,000
Budgeted cash payment	336,675

ekkarill92 answered 1 year ago

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