Question:

Budgeted purchases for January.

The following information pertains to the operating budgets for Casey Corporation. Budgeted sales: $200,000 in January and $100,000 in February. All sales are on credit. Collections for sales are 60% in the month of sale and 40% the next month. Cost of goods sold (COGS) is 75% of sales. Beginning accounts receivable is $0. Beginning inventory is $14,000. Beginning accounts payable is $80,000, of which 10% is related to sales in November the year before, the remainder is related to the sales in December the year before. All purchases are on credit. Purchases are paid 20% in the month of purchase, 60% the next month, the remainder in the month after the next. Desired ending inventory is 20% of next month's COGS