20-1

Walker Company prepares monthly budgets. The current budget plans for a September ending merchandise inventory of 21,000 units. Company policy is to end each month with merchandise inventory equal to 10% of budgeted sales for the following month. Budgeted sales and merchandise purchases for the next three months follow. The company budgets sales of 210,000 units in October.

Sales (Units) Purchases (Units) July August September 190,000 310,000 280,000 202,000 307,000 273,000 Prepare the merchandise purchases budgets for the months of July, August, and September. WALKER COMPANY Merchandise Purchases Budget For July, August, and September July August September Budgeted ending inventory units 21,000 udgeted units sales for month Required units of available inventory eginning inventory (units) Units to be purchased 202,000 307,000 273,000