Exercise 20-25A (Algo) Merchandising: Preparation of purchases budgets LO P4 Walker Company prepares monthly budgets. Company policy is to end each month with merchandise inventory equal to 20% of budgeted unit sales for the following month. Budgeted sales and merchandise purchases for the next three months follow. Beginning inventory on July 1 is 34,000 units. The company budgets sales of 200,000 units in October. The merchandise cost per unit is $3. July August September Budgeted sales units 170,eee 290, een Prepare the merchandise purchases budgets for the months of July, August, and September 330, eee July Budgeted sales units 170, eee August 330,eee September 290, ece Prepare the merchandise purchases budgets for the months of July, August, and September WALKER COMPANY Merchandise Purchases Budget July August 170,000 330,000 September 290,000 20% 20% 0 0 Budgeted sales units Add: Desired ending inventory Next period budgeted sales units Ratio of inventory to future sales Desired ending inventory units Total required units Less: Beginning inventory units Units to purchase Cost per unit Cost of merchandise purchases 200,000 20% 40,000 330,000 (330,000) 0 3 0 (330,000) (330,000) 3 $ $ 37 s