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Leimersheim GmbH has adopted the following policies regarding merchandise purchases and inven-
tory. At the end of any month, the inventory should be €15,000 plus 90% of the cost of goods to be

sold during the following month. The cost of merchandise sold averages 60% of sales. Purchase terms
are generally net, 30 days. A given month’s purchases are paid as follows: 20% during that month and
80% during the following month.
Purchases in May had been €150,000 and the inventory on May 31 was higher than planned
at €230,000. The manager was upset because the inventory was too high. Sales are expected to be
June, €300,000; July, €290,000; August, €340,000; and September, €400,000.
1. Compute the amount by which the inventory on May 31 exceeded the company’s policies.
2. Prepare budget schedules for June, July, and August for purchases and for disbursements for
purchases.

Respuesta :

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1. The amount by which the inventory on May 31 exceeded the company’s policies is €53,000.

2. The preparation of the budget schedules for June, July, and August for purchases and for disbursements for purchases is as follows:

Purchases:

                                  May               June           July             August  

Cost of goods sold                       180,000      174,000     204,000

Ending Inventory €230,000         171,600      198,600      231,000

Goods available for sale              351,600     372,600     435,000

Beginning Inventory                   230,000       171,600      198,600

Purchases              €150,000      121,600      201,000     236,400

Disbursement for purchases:

                                  May           June           July             August  

20% during the month             24,320       40,200         47,280

80% following month             120,000       97,280       160,800

Total disbursements            €144,320   €137,480    €208,080

Data and Calculations:

Expected ending inventory = €15,000 plus 90% of the next month's cost of goods.

Cost of goods sold = 60% of sales

Purchase terms = net 30 days

Purchase payments:

20% during the month

80% following month

                                  May          June         July           August     September

Expected Sales                    €300,000  €290,000  €340,000  €400,000    

Cost of goods sold                  180,000      174,000    204,000     240,000

Purchases              €150,000

Ending Inventory €230,000

= €15,000 plus 90% of €180,000 = €177,000

Excess ending inventory for May = €53,000 ( €230,000 - €177,000)

Purchases:

                                  May          June         July           August     September

Expected Sales                    €300,000  €290,000  €340,000  €400,000    

Cost of goods sold                  180,000      174,000    204,000     240,000

Ending Inventory €230,000    171,600      198,600    231,000

Goods available for sale         351,600     372,600    435,000

Beginning Inventory               230,000       171,600    198,600    231,000

Purchases              €150,000  121,600      201,000   236,400

Disbursement for purchases:

20% during the month             24,320       40,200      47,280

80% following month             120,000       97,280    160,800

Total disbursements            €144,320   €137,480  €208,080

Learn more about Purchases Budgets at https://brainly.com/question/17076342

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