XYZ Company is a retailer of upscale widget products. The sales forecast for the coming months is:
Revenues
April 250,000
May 275,000
June 300,000
July 350,000
August 375,000
XYZ Company's sales are 60% cash and 40% store credit.
The credit sales are 70% in the month of sale, and the remainder is collected in the following month.
Accounts receivable on April 1 are $50,000
XYZ Company's cost of sales are averages 60% of revenues.
The inventory policy is to carry 25% of next month's sales needs. April 1 inventory will be as expected under the policy.
XYZ Company pays for purchases 56% in the month of purchase and the remaining amount in the following month.
Accounts Payable on April 1 is $90,000
a. Prepare a purchases budget for as many months as is possible.
b. Prepare a cash payments budget for April through June.
c. Prepare a cash receipts budget for April through June.