Jam Co. forecasts merchandise purchases of $11,600 in January, $11,800 in Februa

Question

Jam Co. forecasts merchandise purchases of $11,600 in January, $11,800 in February, and $15,400 in March; 40% of purchases are paid in the month of purchase and 60% are paid in the following month. At December 31 of the prior year, the balance of Accounts Payable (for December purchases) is $8,000. Prepare a schedule of cash disbursements for merchandise for each of the months of January, February, and March. Splinter Company forecasts sales of 6,000 units for April. Beginning inventory is 1,000 units. The desired ending inventory is 30% higher than the beginning inventory. How many units should Splinter purchase in April? i Company forecasts unit sales of 640,000 in April, 720,000 in May, 780,000 in June, and 620,000 in uly. Beginning inventory on April l is 192,000 units, and the company wants to have 30% of next month's ales in inventory at the end of each month. Prepare a merchandise purchases budget for the months of pril, May, and June.

Explanation / Answer

problem :1 Schedule of cash distributions for merchandise for jam Co. january february march Purchases Estimated 11600 11800 15400 payment of cash payment made for current month purchase (40% current month) 4640 4720 6160 11600*0.40 11800*0.40 15400*0.40 payment made previous month purchase (60% previous Month) 8000 6960 7080 11600*0.60 11800*0.60 Cash Distribution for Purchases 12640 11680 13240 problem 2 Units required to be purchased in the month of April Amount in $ Sales Estimated Units 6000 Add: Ending Inventory 1000*130% 1300 less: Opening Inventory -1000 Units required to be purchased in the month of April 6300 problem no:3 Merchandise Purchase Budget for LI company April may June July Estimated sales Units 640000 720000 780000 620000 Add: Closing Inventories 216000 234000 186000 720000*0.30 780000*0.30 620000*0.30 856000 954000 966000 Less: Opening Inventories 192000 216000 234000 marchandise Required to be purchased 664000 738000 732000

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