Problem
Kingston company has the following budgeted inventory purchases:
Kingston pays for inventory purchases as follows:
20% in the month of purchase.
80% in the following month.
All of the inventory is purchased from Klepco.
|
Purchases Budget
|
|
|
|
|
|
|
April
|
May
|
June
|
Total
|
|
Budgeted cost of goods sold
|
624000
|
792000
|
696000
|
2112000
|
|
plus desired ending inventory
|
79200
|
69600
|
57600
|
57600
|
|
Total needs
|
703200
|
861600
|
753600
|
2169600
|
|
less beginning inventory
|
(62400)
|
(79200)
|
(69600)
|
(62400)
|
|
Cost of purchases
|
640800
|
782400
|
684000
|
2107200
|
How much will Kingston pay (in cash) for purchases in June?
How much does Kingston owe Klepco at the end of June?