Purchases and Cash Budgets On July 1, MTC Wholesalers had a cash balance of $350,000 and accounts payable of $198,000. Actual sales for May and June, and budgeted sales for July August September, and October are: Month Actual Sales Month Budgeted Sales May $300,000 July $ 180,000 June 320,000 August 160,000 September 200,000 October 240,000 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 $56,000 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 $ 126,000 $ 112,000 $ 150,000 X Desired ending inventory 56,000 70,000 84,000 Total inventory needs 182,000 182,000 224,000 Less beginning inventory 63,000 56,000 70,000 Purchases $ 119,000 $ 126,000 $ 154,000 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 $ 350,000 ~ $ 389,000 * $ 379,000 x Cash receipts Current month's sales 135,000 120,000 ~ 150,000 Previous month's sales 64,000 ~ 36,000 32,000 Sales two months prior 15,000 ~ 16,000 9,000 V Total receipts 214,000 172,000 191,000 Cash available 564,000 561,000 x 570,000 x Cash disbursements: Purchases 119,000 X 126,000 X 154,000 X Operating costs 56,000 56,000 56,000 Total disbursements 175,000 x 182,000 X 210,000 X Cash balance, ending $ 389,000 x $ 379,000 x $ 360,000 x