Gems Limited sells many styles of earrings, but all are sold for the same price - $10 per pair. Budgeted sales for the next four months are as follows (in pairs of earrings):
$$\begin{array} { l r }
\text { Month } & \text { Sales (pairs) } \
\text { April (budget) } & 65000 \
\text { May (budget) } & 100000 \
\text { June (budget) } & 50000 \
\text { July (budget) } & 30000
\end{array}$$
The increase in sales before and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month.
The supplier requires 50% of purchases to be paid in cash immediately at the time of purchase, with the remaining 50% to be paid 30 days after purchase.
Inventory in units at the end of March totalled 26 000 and the amount owed to suppliers at the end of March was $100 000.
a. Prepare a purchases budget in units and in dollars for the period April to June. Show the budget by month and in total for the quarter.
b. Prepare a schedule of expected cash disbursements for purchases, for the period April to June. Show the budget by month and in total for the quarter.

Question

Gems Limited sells many styles of earrings, but all are sold for the same price - $10 per pair. Budgeted sales for the next four months are as follows (in pairs of earrings):
 $$\begin{array} { l r } 
\text { Month } & \text { Sales (pairs) } \
\text { April (budget) } & 65000 \
\text { May (budget) } & 100000 \
\text { June (budget) } & 50000 \
\text { July (budget) } & 30000
\end{array}$$ 
The increase in sales before and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month.
The supplier requires 50% of purchases to be paid in cash immediately at the time of purchase, with the remaining 50% to be paid 30 days after purchase. 
Inventory in units at the end of March totalled 26 000 and the amount owed to suppliers at the end of March was $100 000.
a. Prepare a purchases budget in units and in dollars for the period April to June. Show the budget by month and in total for the quarter.
b. Prepare a schedule of expected cash disbursements for purchases, for the period April to June. Show the budget by month and in total for the quarter.

Quizplus · Accepted Answer

The Answer of Gems Limited sells many styles of earrings, but all are sold for the same price - $10 per pair. Budgeted sales for the next four months are as follows (in pairs of earrings):
 $$\begin{array} { l r } 
\text { Month } & \text { Sales (pairs) } \
\text { April (budget) } & 65000 \
\text { May (budget) } & 100000 \
\text { June (budget) } & 50000 \
\text { July (budget) } & 30000
\end{array}$$ 
The increase in sales before and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month.
The supplier requires 50% of purchases to be paid in cash immediately at the time of purchase, with the remaining 50% to be paid 30 days after purchase. 
Inventory in units at the end of March totalled 26 000 and the amount owed to suppliers at the end of March was $100 000.
a. Prepare a purchases budget in units and in dollars for the period April to June. Show the budget by month and in total for the quarter.
b. Prepare a schedule of expected cash disbursements for purchases, for the period April to June. Show the budget by month and in total for the quarter.

Gems Limited Sells Many Styles of Earrings, but All Are