The purchasing department manager for Gibson Company prepared the following supp
ID: 2337767 • Letter: T
Question
The purchasing department manager for Gibson Company prepared the following supplies purchases budget. Gibson's policy is to maintain an ending supplies balance equal to 10 percent of the following month's supplies expense. April's budgeted supplies expense is $82,000. Required a. Complete the supplies purchases budget by filling in the missing amounts. b. Determine the amount of supplies expense the company will report on its first quarter pro forma income statement c. Determine the amount of ending supplies the company will report on its pro forma balance sheet at the end of the first quarter. Complete this question by entering your answers in the tabs below. Req A Req B and C Complete the supplies purchases budget by filling in the missing amounts. Supplies Purchases Budget January February March S 58,000 62,00068,000 Budgeted supplies expense Plus: Desired ending supplies6.200 Supplies needed Less Beginning supplies Required purchases (on account) 64,200 5,800 5,400 Reg n.nd 2Explanation / Answer
Answers
January
February
March
Budgeted Supplies expense
$ 58,000.00
$ 62,000.00
$ 68,000.00
Plus: Desired ending supplies
$ 6,200.00
$ 6,800.00
$ 8,200.00
Supplies needed
$ 64,200.00
$ 68,800.00
$ 76,200.00
Less: Beginning Supplies
$ 5,800.00
$ 6,200.00
$ 6,800.00
Required Purchases (on account)
$ 58,400.00
$ 62,600.00
$ 69,400.00
---Working for ‘a’
January
February
March
Budgeted Supplies expense
58000
62000
68000
Plus: Desired ending supplies
6200
=68000*10%
=82000*10%
Supplies needed
=58000+6200
=62000+6800
=68000+8200
Less: Beginning Supplies
5800
6200
6800
Required Purchases (on account)
=64200-5800
=68800-6200
=76200-6800
Total Supplies expense for Quarter 1 = Jan + Feb + Mar supplies budgeted expense = 58000 + 62000 + 68000 = $ 188,000
Ending Supplies at the end of quarter = 10% of April’s budgeted supplies expense = $ 82,000 x 10% = $ 8,200
January
February
March
Budgeted Supplies expense
$ 58,000.00
$ 62,000.00
$ 68,000.00
Plus: Desired ending supplies
$ 6,200.00
$ 6,800.00
$ 8,200.00
Supplies needed
$ 64,200.00
$ 68,800.00
$ 76,200.00
Less: Beginning Supplies
$ 5,800.00
$ 6,200.00
$ 6,800.00
Required Purchases (on account)
$ 58,400.00
$ 62,600.00
$ 69,400.00
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