Young is a retailer of assorted baby products. The sales forecast for the coming months is:

Revenues

April $ 185,000

May $ 210,000

June $ 219,000

July $ 242,000

August $ 235,000

Youngs cost of goods sold averages 70% of revenues. The inventory policy is to carry 20% of next months cost of goods sold (cost of sales). April 1 inventory will be as expected under the policy. Young pays for purchases 80% in the month of purchase and 20% the following month. Accounts payable on April 1 is $30,400.

a. Prepare a purchases budget for April through July and a partial August (through Cost of Sales).

April May June July august

sales

x70%

cost of sales

ending inventory

Beginning inventor.

purchases

b. Prepare a cash payments budget for April through July.

April May June July

For this month

For last month

Cash payments