Grande Sonido is a merchandising company specializing in home computer speakers.

Grande Sonido is a merchandising company specializing in home computer speakers. The company budgets its monthly cost of goods sold to equal 70% of sales. Its inventory policy calls for ending inventory in each month to equal 20% of the next month’s budgeted cost of goods sold. All purchases are on credit, and 25% of the purchases in a month is paid for in the same month. Another 60% is paid for during the first month after purchase, and the remaining 15% is paid for in the second month after purchase. The following sales budgets are set: July, $ 350,000; August, $ 290,000; September, $ 320,000; October, $ 275,000; and November, $ 265,000.

Required:

Compute the following. (Hint: For part a, you can use Exhibits 7.7 and 7.8 in our textbook for guidance, but note that budgeted sales are in dollars for this assignment.)

a Budgeted merchandise purchases for July, August, September, and October;

b  Budgeted payments on accounts payable for September and October; and

c. Budgeted ending balances of accounts payable for September and October