Big Sound, a merchandising company specializing in home computer speakers, budgets its monthly cost of goods sold to equal 70% of sales. Its inventory policy calls for ending inventory at the end of each month to equal 20% of the next months budgeted cost of goods sold. All purchases are on credit, and 25% of the purchases in a month is paid for in the same month. Another 60% is paid for during the first month after purchase, and the remaining 15% is paid for in the second month after purchase. The following sales budgets are set: July, $350,000; August, $290,000; September, $320,000; October, $275,000; and November, $265,000. (Hint: For part 1, refer to Exhibits 22A.2 and 22A.3 for guidance, but note that budgeted sales are in dollars for this assignment.)

(1) Compute the budgeted merchandise purchases for July, August, September, and October. July August September $ 40,600 $ 44,800 Budgeted ending inventory Cost of goods sold (estimated) 245,000 203,000 285,600 247,800 Required available inventory Budgeted beginning inventory 49,000 40,600 Required purchases $ 236,600 $ 207,200 $ (2) Compute the budgeted payments on accounts payable for September and October. Purchases August July purchases $ 236,600 $ 207,200 $ August purchases 207,200 September purchases 217,700 October purchases 191,100 (3) Compute the budgeted ending balances of accounts payable for September and October. $ 38,500 224,000 262,500 44,800 217,700 Purchases paid in September $ October $ 141,960 x $ 51,800 X 37,100 192,500 229,600 38,500 191,100 October November 35,490 X 124,320 $ After October 31,080 September July purchases August purchases September purchases September 30 budgeted accounts payable October July purchases August purchases September purchases October purchases October 31 budgeted accounts payable Purchases $ 236,600 207,200 217,700 Purchases $ 236,600 207,200 217,700 191,100 % unpaid as of September 30 % unpaid as of October 31 Amount unpaid as of September 30 Amount unpaid as of October 31