Kevin Montgomery Retail seeks your assistance to develop cash and other budget information for May, June, and July. At April 30, the company had cash of $5,500, accounts receivable of $437,000, inventories of $446,250, and accounts payable of $133,055. The budget is to be based on the following assumptions:SALES:Each month's sales are billed on the last day of the month. Customers are allowed a 3% discount if payment is made within 10 days after the billing date. Receivables are recorded in the accounts at their gross amounts (not net of discounts). 55% of the billings are collected within the discount period; 30% are collected by the end of the month; 9% are collected by the end of the second month; and 6% turn out to be uncollectible.PURCHASES:The marketing, general, and administrative

Question

expenses and 60% of all purchases of merchandise are paid in the month purchased, with the remainder of merchandise purchases paid in the following month. The number of units in each month's ending inventory is equal to 125% of the next month's sales (units). The cost of each unit of inventory is $30. Marketing, general, and administrative expenses, of which $3,000 is depreciation, are equal to 15% of the current month's sales.Actual and projected sales are as shown below: Dollars Units March$472,000  11,800 April$484,000  12,100 May$476,000  11,900 June$456,000  11,400 July$480,000  12,000 August$480,000  12,200 What are the budgeted merchandise purchases (in dollars) for June?

A. $319,500.
B. $364,500.
C. $375,000.
D. $342,000.

Answer 1

Answer: B