The Outturn Company, a merchandising firm, has budgeted its activity for July ac

Question

The Outturn Company, a merchandising firm, has budgeted its activity for July according to the following information:

- Sales at $550,000, all cash
- Inventory on June 30 was $300,000
- July depreciation is budgeted for $35,000
- Cash at July 1 was $25,000
- selling and admin. expenses for July are budgeted at $60,000, cash
- Inventory is planned to be $270,000 on July 31
- the invoice cost for purchases represents 75% of the sales price, all cash

The budgeted cash disbursements for July are:
a.$382,500. b.$472,500. c. $477,500. d. $442,500.

please show work

Explanation / Answer

Inventory on July 31 $270,000 Cost of goods sold $412,500 Total 682,500 Less: Inventory July 1 300,000 Cash Purchase 382,500 Cash Purchase 382,500 Selling & Admin Exp 60,000 Total cash disbursement 442,500 Correct option is D

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