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Hardy Company's cost of goods sold is consistently 70% of sales. The company plans ending merchandise Inventory for each month equal to 20% of the
Hardy Company's cost of goods sold is consistently 70% 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 40% 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 25% IS paid for during the second month after purchase. Expected sales are: August (actual). $375,000, September (actual), $320,000: October (estimated), $320,000, and November (estimated), $350,000 Use this information to determine October's expected cash payments for purchases. Calculate Monthly Purchases: August September October November 262.500 224,000 Budgeted ending inventory Cost of goods sold (estimated) Required available inventory Budgeted beginning inventory Required purchases 3 0$ 0$ Calculate Payments Made for Inventory: Purchases paid in September October Purchases August After October August purchases September purchases October purchases Determine October's Expected Cash Payments for Purchases Ootobar's expected cash payments for ourchases
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