Merchandise Purchases Budget--- Accounting
I'm trying to prepare a merchandise purchases budget with this information:
Weltin Industrial Gas Corporation supplies acetylene and other compressed gases to industry.
Sales are budgeted at $390,000 for November, $370,000 for December and $380,000 for January.
The company purchases 70% of it's merchandise in the month prior to the sale, and 30% in the month of the sale. Payment for merchandise is made the month following the purchase.
COGS is 60% of sales
Other monthly expenses paid in cash= $21,000
Monthly depreciation= $18,000
Assets:
Cash: 25,000
A/R: 71,000
Inventory: 163,000
Property: 1,088,000
Total Assets: 1,347,800
I can't figure out how to adjust COGS, and use the inventory to come up with a budget for November and December. Please help!
Comment on Just Looking's post
Thanks, I understand how to put together the purchases budget for the first month, but I'm confused about how to calculate the second month's. Do I still take 70% of out of the new inventory of 155,400?
Comment on Just Looking's post
Ok, so for December I got $226,200. Please let me know if it is correct. As far as setting up the budget, I want to make sure I'm putting things in the right areas. There are four lines which I have to fill in. Right now I have beginning inventory first, the november's budget and then decembers budget. Lastly I have the total cash disbursements. Is this OK? Thank you!
Comment on Just Looking's post
The heading says prepare a Merchandise Purchases budget for November and December.
Looks kind of like this:
November December
________________________________________
________________________________________
________________________________________
Total cash disembursements_________________
I have to fill in the three lines
Comment on Just Looking's post
But, the months are off the right as a heading
Comment on Just Looking's post
Thanks :] With the three lines that I have do I use inventory, then November, then December? Or how should I title them?
Comment on Just Looking's post
Thank you! That will give me a blank line though. Sorry I didn't explain well. I have three lines to fill in, and the fourth line is titled "total cash disembursements"
Comment on Just Looking's post
Ok thank you! Do I add together the total purchases from November and December to find the total cash disbursements? If that is how to do it I got $451800
Comment on Just Looking's post
Yeah, there isn't a column for January. So how do I total the cash disbursements for each month?
Comment on Just Looking's post
It isn't separated it's directly below it.