Check my work Hardy Company's cost of goods sold is consistently 60% of sales. The company plans ending merchandise inventory for each month equal to 20% of the next month's budgeted cost of goods sold. All merchandise is purchased on credit, and 50% of the purchases made during a month is paid for in that month. Another 35% is paid for during the first month after purchase, and the remaining 15% is paid for during the second month after purchase. Expected sales are August (actual), $325,000; September (actual), $320,000; October (estimated), $250,000; and November (estimated), $310,000. Use this information to determine October's expected cash payments for purchases. Calculate Monthly Purchases: November August 38,400 $ September October $ 30,000 $ 37,200 192,000 150,000 186,000 Budgeted ending inventory Cost of goods sold (estimated) Required available inventory Budgeted beginning inventory Required purchases 195,000 233,400 222,000 187,200 39,000 38,400 183,600 $ 30,000 157,200 $ 194,400 $ Calculate Payments Made for Inventory: --------- Purchases paid in -------- September October After October Purchases August $ 194,400 August purchases September purchases October purchases 183,600 157,200 Determine October's Expected Cash Payments for Purchases. October's expected cash payments for purchases Check my work Hector Company reports the following: Sales Purchases July $50,000 14,400 August $72,000 19,200 September $66,000 21,600 Payments for purchases are made in the month after purchase. Selling expenses are 10% of sales, administrative expenses are 8% of sales, and both are paid in the month of sale. Rent expense of $7,400 is paid monthly. Depreciation expense is $2,300 per month. Prepare a schedule of budgeted cash payments for August and September. HECTOR COMPANY Budgeted Cash Payments For August and September August September Payments for