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 month's predicted cost of sales. The other half of the merchandise is acquired during the month of sale. All purchases 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.

Do not use a negative sign with your answers.

MTC Wholesalers
Purchases Budget
For the Months of July, August, and September
		July	August	September
Inventory required, current sales		$Answer	$Answer	$Answer
Desired ending inventory		Answer	Answer	Answer
Total inventory needs		Answer	Answer	Answer
Less beginning inventory		Answer	Answer	Answer
Purchases		$Answer	$Answer	$Answer

Do not use a negative sign with your answers.

MTC Wholesalers
Cash Budget
For the Months of July, August, and September
		July	August	September
Cash balance, beginning		$Answer	$Answer	$Answer
Cash receipts
Current month's sales
Previous month's sales
Sales two months prior
Total receipts
Cash available
Cash disbursements:
Purchases
Operating costs
Total disbursements
Cash balance, ending

Production and Purchases Budgets At the beginning of October, Comfy Cushions had 1,600 cushions and 10,500 pounds of raw materials on hand. Budgeted sales for the next three months are:

Month	Sales
October	8,000 cushions
November	10,000 cushions
December	13,000 cushions

Comfy Cushions wants to have sufficient raw materials on hand at the end of each month to meet 25 percent of the following month's production requirements and sufficient cushions on hand at the end of each month to meet 20 percent of the following month's budgeted sales. Five pounds of raw materials, at a standard cost of $0.90 per pound, are required to produce each cushion.

Required a. Prepare a production budget for October and November. Do not use a negative sign with your answers.

Comfy Cushions
Production Budget
For the Months of October and November
	October	November	December
Unit Sales
Desired ending inventory
Finished goods requirements
Less beginning inventory
Production requirements

b. Prepare a purchases budget in units and dollars for October. Do not use a negative sign with your answers.

Comfy Cushions
Purchases Budget
For the Month of October
		October	November
Production requirements
Desired ending inventory
Raw materials requirements
Less beginning inventory
Purchase requirements (units)
Purchase requirements (in dollars)

Cash Disbursement Timber Company is in the process of preparing its budget for next year. Cost of goods sold has been estimated at 70 percent of sales. Lumber purchases and payments are to be made during the month preceding the month of sale. Wages are estimated at 15 percent of sales and are paid during the month of sale. Other operating costs amounting to 10 percent of sales are to be paid in the month following the month of sale. Additionally, a monthly lease payment of $14,000 is paid for computer services. Sales revenue is forecast as follows

Month	Sales Revenue
February	$170,000
March	210,000
April	220,000
May	260,000
June	240,000
July	280,000

Required Prepare a schedule of cash disbursements for April, May, and June. Do not use a negative sign with your answers.

Timber Company
Schedule of Cash Disbursements
April, May, and June
	April	May	June
Lumbers purchases
Wages
Operating expenses
Lease payment
Total disbursements