Question

has a sales budget for next month of $250,000. Cost of goods sold is expected to be 40% of sales. All units are paid for in the month following purchase. The beginning inventory is $20,000 and an ending inventory of $25,000 is desired. Beginning accounts payable is $52,000. The purchases for next month are ________.

Answer 1

$105,000

Step-by-step explanation:

Given that,

Sales budget for next month = $250,000

Cost of goods sold is expected to be 40% of sales.

Beginning inventory = $20,000

Desired ending inventory = $25,000

Beginning accounts payable = $52,000

Purchases for next month;

= Cost of goods sold + Desired ending inventory - Beginning inventory

= (40% × $250,000) + $25,000 - $20,000

= $100,000 + $25,000 - $20,000

= $105,000