Walker Company prepares monthly budgets. The current budget plans for a Septembe

Question

Walker Company prepares monthly budgets. The current budget plans for a September ending merchandise inventory of 28,500 units. Company policy is to end each month with merchandise inventory equal to 15% of budgeted sales for the following month. Budgeted sales and merchandise purchases for the next three months follow. The company budgets sales of 190,000 units in October.

Prepare the merchandise purchases budgets for the months of July, August, and September.

Sales (Units) Purchases (Units) July 180,000 201,000 August 320,000 318,500 September 310,000 292,000

Explanation / Answer

WALKER COMPANY Merchandise Purchases Budget For July, August, and September July August September Budgeted ending inventory units 48000 46500 28,500 Budgeted units sales for month 180000 320000 310000 Required units of available inventory 228000 366500 338500 Beginning inventory (units) 27000 48000 46500 Units to be purchased 201,000 318,500 292,000

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