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  • 1.  Preparing the budget - Part 1 - Section B question

    Posted 14 days ago

    I am not sure how has the decrease in inventory reduced the cash disbursements.


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    Nupur Mahajan
    nupur1188@...
    Hartford CT United States
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  • 2.  RE: Preparing the budget - Part 1 - Section B question

    Posted 14 days ago

    Here, company has sold 3,000,000 worth inventories. But, it won't be replacing 160,000 worth of it. That's why closing stock has come down by 160,000. So, company is expected to purchase 2,840,000 worth inventory.

    At the same time, payable related to inventory has come down by 275,000. It means company will be paying 275,000 from previous period during current period. So, it should be added to 2,840,000. Here comes the answer 3,115,000.



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    Waseem
    Financial Analyst
    Waseem
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  • 3.  RE: Preparing the budget - Part 1 - Section B question

    Posted 14 days ago
    As in the answer explanation it says that $160,000 worth of inventory was already sold the previous month before this as mentioned decrease in inventory so start with the $2,840,000 amount of beginning balance of inventory with the disbursement of accounts payable of $275000 so the cogs of 2840000+275000= 3115000.

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    Mubasheera Mahveen
    Student
    Hyderabad
    India
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  • 4.  RE: Preparing the budget - Part 1 - Section B question

    Posted 13 days ago
    How come 3000000 came? Can't understand

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    Lokesh B
    None
    Chennai TN
    India
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  • 5.  RE: Preparing the budget - Part 1 - Section B question

    Posted 13 days ago
    The question says that gross margin is 25% of sales so the rest 75% should be cost of goods sold hence 75% of 4000000= 3000000.

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    Mubasheera Mahveen
    Student
    Hyderabad
    India
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  • 6.  RE: Preparing the budget - Part 1 - Section B question

    Posted 13 days ago
    Thank you for the clarification.






  • 7.  RE: Preparing the budget - Part 1 - Section B question

    Posted 9 days ago
    Thanks everyone it is clear

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    Nupur Mahajan
    nupur1188@...
    Hartford CT United States
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