E22-28. Purchases and Cash BudgetsOn July 1, MTC Wholesalers had a cash balance of $125,000 and accounts payable of $160,000, andInventory of $78,000. Actual sales for May and June, and budgeted sales for July, August, September,and October are Actual Budgeted Month Y1 [T Month SalesMay.......... ... ...... $250,000 July. ... $260,000June . ... 225,000 August ....... ... ... ..., 240,000 September .................. 270,000October. . ................... 275,000 All sales are on credit with 60% collected during the month of sale, 30% collected during the nextmonth, and 10% collected during the second month following the month of sale. Cost of goods soldaverages 60% of sales revenue. Ending inventory is one-half of the next month's predicted cost of sales.The other half of the merchandise is acquired during the month of sale. All purchases are paid for inthe month after purchase. Operating costs are estimated at $95,000 each month and are paid during themonth incurred. RequiredPrepare purchases and cash budgets for July, August, and September.