To prepare the budget schedules for purchases and disbursements, we need to calculate the expected

ending inventory for each month, then calculate the required purchases to meet the expected sales and
ending inventory levels. We also need to calculate the cash disbursements for each month's purchases
based on the payment terms.

First, we will calculate the expected ending inventory for each month:

May ending inventory: $275,000

June ending inventory: $220,000

July ending inventory: $270,000

August ending inventory: $240,000

Next, we will calculate the expected cost of goods sold for each month based on the expected sales:

June cost of goods sold: 60% x $440,000 = $264,000

July cost of goods sold: 60% x $350,000 = $210,000

August cost of goods sold: 60% x $420,000 = $252,000

Using the expected ending inventory and cost of goods sold, we can calculate the required purchases for
each month:

June purchases: ($220,000 + $264,000) - $275,000 = $209,000

July purchases: ($270,000 + $210,000) - $220,000 = $260,000

August purchases: ($240,000 + $252,000) - $270,000 = $222,000

To calculate the cash disbursements for each month's purchases, we need to apply the payment terms:

June purchases disbursement: $20,900 (10% of $209,000)

July purchases disbursement: $208,000 (80% of $260,000)

August purchases disbursement: $22,200 (10% of $222,000)

So the budget schedules for purchases and disbursements are:

June:

Purchases: $209,000

Disbursements: $20,900

July:

Purchases: $260,000

Disbursements: $208,000

August:

Purchases: $222,000

Disbursements: $22,200