Question 3-20

Jaime's Hat Shop sells hats with college logos on them; the hats sell for $22 each. This year. Jaime's expects to sell 350 hats in May, 300 in June. 400 in July. 800 in August, 1, 040 in September, and 750 in October. On average, 25 percent of its customers purchase on credit. Jaime's allows those customers to pay for their purchases the month after they have made their purchases. Required: Prepare a sales budget for Jaime's Hat Shop for the third quarter of this year. Refer to 3-19. Company policy is to plan to end each month with an ending inventory equal to 20 percent of the next month's projected sales. Jaime's pays $8 for each hat that it purchases. Jaime and his supplier have an arrangement that allows Jaime's Hat Shop to pay for each purchase 60 days after the purchase. Required: Prepare a purchases budget for the third quarter of this year for Jaime's Hat Shop