1. **State the problem:** We need to prepare budget schedules for purchases and disbursements for June, July, and August based on given inventory, purchases, sales, and payment terms. 2. **Given data:** - Inventory at end of months: May = 250,000; June = 220,000; July = 270,000; August = 400,000 - Purchases: May = 180,000; June = ?; July = ?; August = ? - Sales: June = 440,000; July = 350,000; August = 400,000 - Cost of goods sold (COGS) = 60% of sales - Payment terms for purchases: 10% paid in the month of purchase, 80% paid next month, 10% paid the month after 3. **Calculate purchases for June, July, August:** Formula for purchases: $$\text{Purchases} = \text{COGS} + \text{Ending Inventory} - \text{Beginning Inventory}$$ Calculate COGS for each month: - June COGS = 60% of 440,000 = $264,000$ - July COGS = 60% of 350,000 = $210,000$ - August COGS = 60% of 400,000 = $240,000$ Calculate purchases: - June purchases = $264,000 + 220,000 - 250,000 = 234,000$ - July purchases = $210,000 + 270,000 - 220,000 = 260,000$ - August purchases = $240,000 + 400,000 - 270,000 = 370,000$ 4. **Prepare disbursements schedule:** Payments for purchases are made as: - 10% in the month of purchase - 80% in the next month - 10% in the month after next Calculate payments for June, July, August: - June payments: - 10% of June purchases = 0.10 × 234,000 = 23,400 - 80% of May purchases = 0.80 × 180,000 = 144,000 - 10% of April purchases = 0 (April purchases not given, assume 0) - Total June payments = 23,400 + 144,000 + 0 = 167,400 - July payments: - 10% of July purchases = 0.10 × 260,000 = 26,000 - 80% of June purchases = 0.80 × 234,000 = 187,200 - 10% of May purchases = 0.10 × 180,000 = 18,000 - Total July payments = 26,000 + 187,200 + 18,000 = 231,200 - August payments: - 10% of August purchases = 0.10 × 370,000 = 37,000 - 80% of July purchases = 0.80 × 260,000 = 208,000 - 10% of June purchases = 0.10 × 234,000 = 23,400 - Total August payments = 37,000 + 208,000 + 23,400 = 268,400 **Final schedules:** | Month | Purchases | Payments for Purchases | |-------|-----------|-----------------------| | June | 234,000 | 167,400 | | July | 260,000 | 231,200 | | August| 370,000 | 268,400 | This completes the budget schedules for purchases and disbursements for June, July, and August.