The accountant for Schulz Ltd compiled the following figures in order to estimate budgeted cash payments for March and April 2025.

Schulz Ltd uses the following assumptions when preparing budgets. The cost of sales is 60% of sales. The company pays for 60% of its purchases in the month after purchase, 30% in the second month, following the purchase and 10% in the third month following the purchase. No discounts are received. It is business policy to maintain a month-end inventory balance sufficient to meet the projected sales requirement for the following month.
Required

(a) Calculate the budgeted purchases for March and April 2025. Ignore GST.

(b) Prepare a schedule of expected cash payments for purchases for March and April 2025.

Transcribed Image Text:

Purchases for December Purchases for January Purchases for February Ending inventory - 28 February Budget sales: March April May June $156 000 149 000 158 700 131 400 248 400 223 000 265 000 240 000