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    jpsider's Avatar
    jpsider Posts: 1, Reputation: 1
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    #1

    Nov 29, 2010, 11:39 AM
    What is the cost of merchandise purchased in the month of December?
    Sales are budgeted as $260,000 for November, $230,000 for December, $210,000 for January
    The cost of goods sold are 80% of sales
    The company purchases 50% of its merchandise in the month prior to the month of sale and 50% in the month of sale. Payments for merchandise is made in the month following the purchase
    Statement of Financial Position
    Oct. 31
    Assets
    Cash 28,000
    Accts Rec 78,000
    Inventory 104,000
    Property,plant equip (net of 640,000 accum dep) 1,132,000
    Total assets 1,342,000
    Liabilities and stockholders equity
    Accts payable 200,000
    Common stock 800,000
    Retained earnings 342,000
    Total liab and stock equity 1,342,000
    Just Looking's Avatar
    Just Looking Posts: 1,610, Reputation: 480
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    #2

    Dec 1, 2010, 05:26 PM

    We won't do your homework for you. Please read this announcement.

    https://www.askmehelpdesk.com/financ...-b-u-font.html

    I will get you started. If you'd like to post again with your attempt at the problem, we can check it and tell you if you are on the right track.

    Start with a spreadsheet showing the expected sales in each month. You know that COGS are 80% of sales, so you can calculate the COGS for the month. Your problem states 50% are purchased in the previous month and 50% in the month of sale. With this info, you can compute the purchases in December. Just take this one step at a time and please ask if you get confused, but it would help if you show your work. We can then see what is confusing you. Thanks.

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