Gems Limited Sells Many Styles of Earrings, but All Are

Essay

Gems Limited sells many styles of earrings, but all are sold for the same price - $10 per pair. Budgeted sales for the next four months are as follows (in pairs of earrings):
$$\begin{array} { l r } \text { Month } & \text { Sales (pairs) } \\\text { April (budget) } & 65000 \\\text { May (budget) } & 100000 \\\text { June (budget) } & 50000 \\\text { July (budget) } & 30000\end{array}$$
The increase in sales before and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month.
The supplier requires 50% of purchases to be paid in cash immediately at the time of purchase, with the remaining 50% to be paid 30 days after purchase.
Inventory in units at the end of March totalled 26 000 and the amount owed to suppliers at the end of March was $100 000.
a. Prepare a purchases budget in units and in dollars for the period April to June. Show the budget by month and in total for the quarter.
b. Prepare a schedule of expected cash disbursements for purchases, for the period April to June. Show the budget by month and in total for the quarter.