Leimersheim GmbH has adopted the following policies regarding merchandise purchases and inventory.At the end of any month, the inventory should be €15,000 plus 90% of the cost of goods to besold during the following month. The cost of merchandise sold averages 60% of sales. Purchase termsare generally net, 30 days. A given month’s purchases are paid as follows: 20% during that month and80% during the following month.Purchases in May had been €150,000 and the inventory on May 31 was higher than plannedat €230,000. The manager was upset because the inventory was too high. Sales are expected to beJune, €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 forpurchases.
Leimersheim GmbH has adopted the following policies regarding merchandise purchases and inventory.
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.
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