Question

Cave Hardware's forecasted sales for April, May, June, and July are $150,000, $250,000, $100,000, and $290,000, respectively. Sales are 60% cash and 40% credit with all accounts receivables collected in the month following the sale. Cost of goods sold is 80% of sales and ending inventory is maintained at $55,000 plus 20% of the following month's cost of goods sold. All inventory purchases are paid 26% in the month of purchase and 74% in the following month. What are the budgeted cash payments in June to account for the inventory purchases at Cave Hardware?

Answer 1

Answer:

$160,000

Explanation:

The computation of budgeted cash payments in June is shown below:-

For computing the budgeted cash payments in June first we need to find out the may credit sales and June cash sales.

May credit Sales = May = $250,000 × 40% × 100%

= $100,000

and

June cash sales = $100,000 × 60%

= $60,000

Cash collection budgeted June = May credit Sales + June cash sales

= $100,000 + $60,000

= $160,000