At March 31 St. Enterprises, a merchandise firm, had an inventory of 38000 units and it had accounts receivable totaling $85000. Sales in units have been budgeted as follows for the next four months:
April (60,000)
May (75,000)
June (90,000)
July (81,000)

The company board of directors has established a policy to commerce in April that the inventory at the end of each month should contain 40% of the units required for the following month's budgeted sales.

Prepare a merchandise purchases budget showing how many units should be purchased for each of the months April, May, and June

Please someone help!

I got 30,000 for April, 36,0000 for May, and 32400 for June.
Could anyone please help me solve this??

How did you arrive at these figures you mentioned?

The procedure is:
Sales
Add: Ending inventory (40% of next month's sale)
Less Beginning inventory
Budgeted purchases

I did the following:

30000 for April (75000*40%)
36000 for May (90000*40%)
32400 for June (81000*40%)

The procedure seems simple but how do I get the beginning inventory??

Quote:

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Originally Posted by karlal

I did the following:

30000 for April (75000*40%)
36000 for May (90000*40%)
32400 for June (81000*40%)

The procedure seems simple but how do I get the beginning inventory??????

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Beginning inventory for April is given at 38000 units. For May it will be April's ending inventory and so on for June