Young is a retailer of assorted baby products. The sales forecast for the coming months is: Young's cost of sales averages 60% of revenues. The inventory policy is to carry 30% of next month's sales needs. April 1 inventory will be as expected under the policy. Young pays for purchases 80% in the month of purchase and 20% the following month. Accounts payable on April 1 is $22,400.
a. Prepare a purchases budget for as many months as is possible.
b. Prepare a cash payments budget for April through July.

Question

Young is a retailer of assorted baby products. The sales forecast for the coming months is:  Young's cost of sales averages 60% of revenues. The inventory policy is to carry 30% of next month's sales needs. April 1 inventory will be as expected under the policy. Young pays for purchases 80% in the month of purchase and 20% the following month. Accounts payable on April 1 is $22,400.
a. Prepare a purchases budget for as many months as is possible.
b. Prepare a cash payments budget for April through July.

Quizplus · Accepted Answer

The Answer of Young is a retailer of assorted baby products. The sales forecast for the coming months is:  Young's cost of sales averages 60% of revenues. The inventory policy is to carry 30% of next month's sales needs. April 1 inventory will be as expected under the policy. Young pays for purchases 80% in the month of purchase and 20% the following month. Accounts payable on April 1 is $22,400.
a. Prepare a purchases budget for as many months as is possible.
b. Prepare a cash payments budget for April through July.

Young Is a Retailer of Assorted Baby Products