Purchases and Cash Budgets

On July 1, MTC Wholesalers had a cash balance of $175,000 and accounts payable of $99,000. Actual

sales for May and June, and budgeted sales for July, August, September, and October are:

Month

Actual

Sales Month

Budgeted

Sales

May. . . . . . . . . . . . . . . . . . . . . . $150,000 July . . . . . . . . . . . . . . . . . . . . . . $ 90,000

June . . . . . . . . . . . . . . . . . . . . . 160,000 August . . . . . . . . . . . . . . . . . . . 80,000

September . . . . . . . . . . . . . . . . 100,000

October . . . . . . . . . . . . . . . . . . 120,000

All sales are on credit with 75 percent collected during the month of sale, 20 percent collected during

the next month, and 5 percent collected during the second month following the month of sale. Cost

of goods sold averages 70 percent of sales revenue. Ending inventory is one-half of the next months

predicted cost of sales. The other half of the merchandise is acquired during the month of sale. All pur-

chases are paid for in the month after purchase. Operating costs are estimated at $28,000 each month

and are paid during the month incurred.

Required

Prepare purchases and cash budgets for July, August, and September