Mascot Ascots, a retailer of collegiate neckwear, has completed the sales forecast for the coming year.

Mascot Ascots maintains an ending inventory level of 65 percent of the following month’s cost of goods sold. The company’s cost of goods sold is 40 percent of sales.

Required
a. Prepare Mascot Ascots’ purchases budget for October. Use the following format:
Budgeted sales dollars
* Cost of goods sold percentage
= Cost of goods sold
+ ending inventory
= Total inventory required
- Beginning inventory
= Budgeted purchases

b. Assuming that Mascot Ascots pays for 40 percent of its purchases in the month of purchase and the remaining 60 percent in the month following the purchase, prepare the company’s cash payments budget forOctober.

Transcribed Image Text:

anuary $37,000 July February $28,000 August March April May June $38,000 $47,000 $32,000 September $53,000 40,000 October $56,000 November $48,000 $31,000 December $62,000 $60,000