Erika Dillinger is a dealer in computers. She has adopted the following policies regarding merchandise purchase and inventory. At the end of any month, the inventory should be €30,000 plus 80% of cost of goods to be sold during the following month. The cost of merchandise sold averages 70% of sales. Purchase terms are generally net, 30 days. Purchase of a given month is paid as follows: 30% during the month and 70% during the following month.

Purchases in June had been €300,000 and the inventory on June 30 was higher than planned at €460,000. Erika was upset because the inventory was too high. Sales are expected to be July, €600,000; August, €580,000; September, €680,000; and October, €800,000.

1. Compute the amount by which the inventory on June 30 exceeded the company’s policies. 

2. Prepare budget schedules for July, August, and September for purchases and for disbursements for purchases.