7-28

1. Budgeted Cost of Goods Sold for June = $ 1,980,000 / 120 x 100 = $ 1,650,000.

2. Budgeted Merchandise Purchase for July:

June July August

Budgeted Cost of Goods Sold $ 1,650,000 $ 1,730,000 $ 1,820,000

Desired Ending Inventory 432,500 455,000

Total Inventory Needed 2,185,000

Less: Beginning Inventory (25% of COGS) 412,500 432,500 455,000

Budgeted Merchandise Purchases $ 1,752,500

7-30 

Sales Budget 

June  July  August 

$ $ $
Cash sales  349,600 352,800 401,600
Credit sales  87,400 88200 100,400
Total Sales  437,000 441,000 502,000

Cash Collection Budget 

 June  July  August 
$ $ $
Cash sales (80% of current month sales) 349,600 352,800 401,600
Credit sales (20% of following month 88,200 100,400 106,200

sales)
Total Collections  437,800 453,200 507,800

7-31

Sales Budget 

January  February March

$ $ $
Cash sales  81,200 90,800 99,200
Credit 121,800 136,200 148,800

Sales 
Total Sales  203,000 227,000 248,000

Cash Collections Budget 

Januar February March 

y
$ $ $
Cash Sales  811,200 90,800 99,200
Credit sales: 
55% collected in the month of the 66,990 74,910 81,840
sale
35% in the following month  52,850 42,630 47,670
10% in the following month  15,000 15,100 12,180
Total Collections  216,040 223,440 240,890

7-33

Purchases Budget 
 June  July  August 
$ $ $
Budgeted cost of goods sold  291,85 233,35 198,900

0 0
Plus, desired ending 226,00 209,00 241,000
inventory 
0 0
Total merchandise needed  517,85 442,35 439,900

0 0
Less beginning inventory  271,00 226,00 209,000

0 0
Purchases  788,85 668,35 648,900

0 0

Cash Disbursement for Purchases 

June  July  August 

$ $ $
15% of that month purchases  118,327. 100,252. 97,335

5 5
70% of next month purchases  131,600 552,195 467,845
15% of following month 38,700 28,200 118,327.5
purchases
Disbursement for purchases  288,627. 680,647. 683,507.5

5 5

7-35

Cash Budget

June
 $
Beginning cash balance  15,000
Cash receipts and disbursements:
Collection from customers  276,000
Payment for merchandise  (193,000)
Payment for operating expenses (56,000)
Net Cash receipts and disbursements  27,000
Ending cash balance  42,000