Graviela Charleen - 2502001574

Class: LB53

Most sales are made on credit, usually 70% is paid upon receipt of the
goods. 30%payment in the following month. Sales actual in April and
sales budget in the next 4 months:

Month US $
April (Actual) 400,000
May 500,000
June 700,000
July 900,000
August 600,000

The inventory is purchased on credit. The cost of goods sold

for the company equals 60 of sales. The company pays 50% of
the purchase when the goods are received at the warehouse
and pays it off in the following month. End-of-month
inventories must meet the company's requirement of being
equal to 25% of the cost of goods sold for the next month.
A. How much money the company may expect to bring in overall in June.

April May June July August Quarter

April Sales -
70% x 400.000 280,000 280,000
30% x 400.000 120,000 120,000
May Sales -
70% x 500.000 350,000 350,000
30% x 500.000 150,000 150,000
June Sales -
70% x $700,000 490,000 490,000
30% x $700,000 210,000 210,000
July Sales -
70% x $900,000 630,000 630,000
30% x $900,000 270,000 270,000
Agust Sales -
70% x $600,000 420,000 420,000
Total Cash Collection $ 280,000 $ 470,000 $ 640,000 $ 840,000 $ 690,000 $ 2,920,000

B. Determine how much inventory the company should have on hand at the end of May based on the
allocated dollar amount.
April May June July August
Cost of Goods Sold (60%) $ 240,000 $ 300,000 $ 420,000 $ 540,000 $ 360,000

Budgeted Sales 400,000 500,000 700,000 900,000 600,000

Add: Desired Ending Inventory (25%) 75,000 105,000 135,000 90,000
Total Needs $ 475,000 $ 605,000 $ 835,000 $ 990,000 $ 600,000
Less: Beginning Inventory 75,000 105,000 135,000 90,000
Required Production $ 475,000 $ 530,000 $ 730,000 $ 855,000 $ 510,000

C. Calculate the quantity of goods that the business should buy in June and July (with assumption inventory
beginning balance equal with previous month ending balance).

June $ 730,000
July $ 855,000

D. Determine how much cash will be paid to suppliers in month of July related with inventory purchases.

April May June July August Quarter

April Purchases
50% x $475.000 237,500 237,500
50% x $475.000 237,500 237,500
May Purchases
50% x $530.000 265,000 265,000
50% x $530.000 265,000 265,000
June Purchases
50% x $730.000 365,000 365,000
50% x $730.000 365,000 365,000
July Purchases
50% x $855.000 427,500 427,500
50% x $855.000 427,500 427,500
Agust Purchases
50% x $510.000 255,000 255,000
Total Cash Disbursement $ 237,500 $ 502,500 $ 630,000 $ 792,500 $ 682,500 2,845,000