Hardy Company’s cost of goods sold is consistently 70% of sales. The company plans ending merchandise...

Hardy Company’s cost of goods sold is consistently 70% of sales. The company plans 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), $355,000; September (actual), $400,000; October (estimated), $310,000; and November (estimated), $380,000.

Use this information to determine October’s expected cash payments for purchases.

Calculate Monthly Purchases:
		August	September	October	November
Budgeted ending inventory

Required available inventory

Required purchases		$0	$0	$0

Calculate Payments Made for Inventory:
		---------- Purchases paid in ---------------
	Purchases	August	September	October	After October
August purchases
September purchases
October purchases	0


Determine October’s Expected Cash Payments for Purchases.
October's expected cash payments for purchases

Expert Solution

ekkarill92 answered 1 year ago

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