In May 2017, the budget committee of Grand Stores assembles the following data i

Question

In May 2017, the budget committee of Grand Stores assembles the following data in preparation of budgeted merchandise purchases for the month of June. Expected sales: June $501,000, July $607,300. Cost of goods sold is expected to be 75% of sales. Desired ending merchandise inventory is 30% of the following (next) month's cost of goods sold. The beginning inventory at June 1 will be the desired amount. Compute the budgeted merchandise purchases for June. (Round answers to the nearest whole dollar, e.g. 5,275.)

Explanation / Answer

GRAND STORE MERCHANDISE PURCHASE BUDGET FOR THE MONTH OF JUNE 2017 AMOUNT Budgeted Cost of Goods Sold $375,750 Add: Desired Ending Inventory $136,643 Total Merchandise Inventory needed $512,393 Deduct: Beginning Merchandise Inventory $112,725 Merchandise to be purchased $399,668 Explanation: Ending Inventory= ($607300*75%)*30% $136,643 Beginning Inventory=($501000*75%)*30% $112,725

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