Exercise 20-27A Merchandising: Computing budgeted cash payments for purchases LO P4 Hardy Company's cost of goods sold is consistently 60% of sales. The company plans ending merchandise inventory for each month equal to 30% 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 45% is paid for during the first month after purchase, and the remaining 5% is paid for during the second month after purchase. Expected sales are August (actual), $375,000; September (actual), $410,000; October (estimated), $340,000; and November (estimated), $380,000. Use this information to determine October's expected cash payments for purchases. Calculate Monthly Purchases: November Budgeted ending inventory Cost of goods sold (estimated) Required available inventory Budgeted beginning inventory Required purchases August September October $ 73,800 $ 61,200 $ 68,400 225,000 246,000 204,000 298,800 307,200 272,400 (67,500) (73,800) (61,200) $ 231,300 $ 233,400 $ 211,200 Calculate Payments Made for Inventory: Purchases paid in September October August After October August purchases September purchases October purchases Purchases $ 231,300 233,400 211,200 Determine October's Expected Cash Payments for Purchases. October's expected cash payments for purchases