Ahmed Company purchases all merchandise on credit. It recently budgeted the following month-end accounts payable balances and merchandise inventory balances. Cash payments on accounts payable during each month are expected to be: May, $1,200,000; June, $1,350,000; July, $1,400,000; and August, $1,300,000

	Accounts Payable			Merchandise Inventory
May 31	$	100,000		$	240,000
June 30		120,000			300,000
July 31		300,000			400,000
August 31		190,000			300,000
Compute the budgeted amounts of merchandise purchases.

(1) Compute the budgeted amounts of merchandise purchases. Budgeted amounts: June July August Ending accounts payable $ 120,000 $ 300,000 $ 190,000 Payments on account 1,350,000 1,400,000 130,000 Subtotal 1,470,000 1,700,000 320,000 Beginning accounts payable 100,000 120,000 300,000 Purchases $ 1,370,000 $ 1,580,000 $ 20,000 (2) Compute the budgeted amounts of cost of goods sold. Budgeted amounts: June July August Beginning inventory $ 240,000 $ 300,000 $ 400,000 Purchases 1,370,000 1,580,000 20,000 Cost of goods available for sale Ending inventory (300,000) (400,000) (300,000) Cost of goods sold