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Dear sir please help me with the followi g questions:
Q1. Sales($) 450,000
Gross profit margin 30%
Decrease in trade payables over the month is $10’000
Increase in cost of inventory over the month is $18000What is the budgeted payment during the month?
Sir i calculated cost of sales 315000 and added the decrease in trade payables 10000 ( As it wil increase the payment during the month) and reduced inventory cost by 18000 (as it will increase cash inflow) and answer came 323000.
Required:
What is the budgeted payment during the month?Sir please explain a little.
You must surely have an answer in the same book in which you found the question?
You are correct to add the decrease in payables. However you should add the increase in inventory (not subtract it) because buying more inventory will increase the cash paid out.
Ok sir thanks. Sir answer is given it is wrong.
I was strugling with the concept.
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