The Gomez Company, a merchandising firm, has budgeted its activity for December

Question

The Gomez Company, a merchandising firm, has budgeted its activity for December according to the following information • Sales at $560,000, all for cash. • Merchandise Inventory on November 30 was $280,000. • The cash balance at December 1 was $26,000. • Selling and administrative expenses are budgeted at $34,000 for December and are paid for in cash. • Budgeted depreciation for December is $27,000. • The planned merchandise inventory on December 31 is $290,000. • The cost of goods sold represents 64% of the selling price. • All purchases are paid for in cash. The budgeted cash disbursements for December are:

Explanation / Answer

Answer:

Gomez Company

Budget For December

Working Notes

Inventory

Opening balance 280000

Inventory required 560000*64% 358400

Inventory should be on December 31 290000

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Total Purchase 368400

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Particulars Amount ($) Opening Cash Balance 26000 Sales 560000 Total 586000 Less Expenses Inventory purchase 368400 Selling & administrative expenses 34000 Total expenses 402400 Cash at December 31 183600

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