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 20% of the purchases in a month is paid for in the same month. Another 40% is paid for during the first month after purchase, and the remaining 40% is paid for in the second month after purchase. The following sales budgets are set: July, $400,000; August, $340,000; September, $370,000; October, $325,000; and November, $315,000. (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 September October November August Budgeted ending inventory Required available inventory Required purchases (2) Compute the budgeted payments on accounts payable for September and October. Purchases paid in Purchases September October After October August July purchases August purchases September purchases October purchases (3) Compute the budgeted ending balances of accounts payable for September and October. % unpaid ase of Amount unpaid as of September 30 September Purchases September 30 July purchases August purchases September purchases September 30 budgeted accounts payable % unpaiode ase of Amount unpaid as October 31 Purchases October of October 31 July purchases August purchases September purchases October purchases October 31 budgeted accounts payable