Purchases and Cash Receipts. Olympia Candies is preparing a budget for the second quarter of the current calendar year. The March ending inventory of mer- chandise was $106,000, which was higher than expected. The company prefers to carry ending inventory amounting to the expected sales volume of the next two months. Purchases of merchandise are paid half in the month of purchase and half in the month following purchase, and the balance due on accounts payable at the end of March was $24,000. Budgeted sales are as follows:

Required:
1. Assume that a 25 percent gross profit margin is budgeted. Prepare a budget schedule that shows the following for April, May, and June:

(a) Cost of goods sold.

(b) Purchases required.

(c) Cash payments for merchandise.
2. Assume that the accounts receivable balance on April 1 was $35,000 and that three-fourths of all customers pay in the month of sale and one-fourth in the month following the sale. Prepare a budget showing the cash receipts from accounts receivable for April, May, and June.

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April. May June $ 40,000 July.. $72,000 48,000 60,000 August. 56,000 September 60,000