Brooklyn Furniture, a retail store, has an average gross profit ratio of 45%. The sales forecast for the next four months follows:

July	$	268,000
August		213,000
September		319,000
October		411,000

Management's inventory policy is to have ending inventory equal to 330% of the cost of sales for the subsequent month, although it is estimated that the cost of inventory at June 30 will be $404,000. Required: Calculate the purchases budget, in dollars, for the months of July and August.

Purchases
July
August

Explanation:

	July				August				September
Sales forecast	$	268,000			$	213,000			$	319,000
Cost of sales @ 55%						117,150				175,450
Purchases budget:
Beginning inventory	$	404,000			$
Purchases		?				?
Cost of merchandise available for sale		?				?
Less: Ending inventory (330% next month's cost of goods sold)		(386,595	)			(	)
Cost of goods sold	$	147,400			$	117,150
Cost of merchandise available for sale = (Cost of goods sold + Ending inventory)	$	533,995			$
Purchases = (Cost of merchandise available for sale Beginning inventory)	$	129,995			$