a.Prepare Purchases Budget for December, January, and February. (1.5 Marks)

b.Prepare Cash Payments Budget for January, and February. (5 Marks)

Question 5: 6.5 marks Verge Industries is preparing the budget for the following quarter. Unit sales are the same as purchases. Cost of goods Sold is estimated at 30 percent of sales revenue. Purchases are to be made in the prior month to sales. Verge pays for purchases 40 percent in the month of purchase and 60 percent in the following month. Wages are estimated at 25 percent of sales and are paid during the month. Other operating expenses are estimated at 15 percent of sales and are to be paid next month. Budgeted sales revenues for each month are prepared as follows: December January February March $470,000 $400,000 $420,000 $450,000