Rundle, Inc. sells fireworks. The company’s marketing director developed the fol
ID: 2508967 • Letter: R
Question
Rundle, Inc. sells fireworks. The company’s marketing director developed the following cost of goods sold budget for April, May, June, and July.
Rundle had a beginning inventory balance of $3,400 on April 1 and a beginning balance in accounts payable of $14,700. The company desires to maintain an ending inventory balance equal to 20 percent of the next period’s cost of goods sold. Rundle makes all purchases on account. The company pays 65 percent of accounts payable in the month of purchase and the remaining 35 percent in the month following purchase.
A-Prepare an inventory purchases budget for April, May, and June.
B-Determine the amount of ending inventory Rundle will report on the end-of-quarter pro forma balance sheet.
C-Prepare a schedule of cash payments for inventory for April, May, and June.
D-Determine the balance in accounts payable Rundle will report on the end-of-quarter pro forma balance sheet.
April May June July Budgeted cost of goods sold $73,000 $83,000 $93,000 $99,000Explanation / Answer
A.
INVENTORY PURCHASES BUDGET
B.
End of Quarter inventory = 19,800 (99,000*20%)
C.
SCHEDULE OF CASH PAYMENTS
D.
Balance in Accounts payable = 94,200 * 35% = 32,970
April May June Cost of goods sold 73,000 83,000 93,000 Ending inventory 16,600 (83,000*20%) 18,600 (93,000*20%) 19,800 (99,000*20%) Total needs 89,600 101,600 112,800 Beginning inventory (3,400) (16,600) (18,600) Purchases 86,200 85,000 94,200Related Questions
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