Purchases and Collections. Murphy Neat Shirts Co. sells shirts and is budget- ing for 1998. The beginning accounts receivable, inventory (at cost), and accounts payable balances and partial 1998 sales data are:

Required:
1. Quarterly ending inventory should be 60 percent of the next quarter’s expected sales volume. Find the budgeted purchases of shirts during the first quarter.
2. Sales are all on credit, and 80 percent is collected in the quarter of sale. The remainder is collected in the next quarter. Find the budgeted cash collections for the second quarter.

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Beginning balances (1/1/98); Accounts receivable Inventory (at cost).. Accounts payable. 1998 Data: Sales Cost of sales. $200,000 150,000 100,000 First Quarter Second Quarter $600,000 360,000 $800,000 480,000