Fanning, Inc. sells fireworks. The company’s marketing director developed the fo

Question

Fanning, Inc. sells fireworks. The company’s marketing director developed the following cost of goods sold budget for April, May, June, and July. April May June July Budgeted cost of goods sold $64,000 $74,000 $84,000 $90,000 Fanning had a beginning inventory balance of $3,800 on April 1 and a beginning balance in accounts payable of $15,000. The company desires to maintain an ending inventory balance equal to 15 percent of the next period’s cost of goods sold. Fanning 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. Required Prepare an inventory purchases budget for April, May, and June. Determine the amount of ending inventory Fanning will report on the end-of-quarter pro forma balance sheet. Prepare a schedule of cash payments for inventory for April, May, and June. Determine the balance in accounts payable Fanning will report on the end-of-quarter pro forma balance sheet.

Explanation / Answer

April May June July Cost of Goods sold 64000 74000 84000 90000 Add: Ending Inventory 11100 12600 13500 (15% of next month COGS) (74000*15%) (84000*15%) (90000*15%) Less: Opening Inventory 3800 11100 12600 (Given) Req 1 Inventory Purchase budget 71300 75500 84900 Req 2: Ending Inventory on June 30 : $ 13500 (closing inventory of June) April May June July Inventory Purchase budget 71300 75500 84900 Cash Disbursals Opening Accounts payable 15,000 April Purchase 46345 24955 May Purchase 49075 26425 June Purchase 55185 Req 3: Total Cash disbursals 61,345 74,030 81,610 Req 4: Ending balance of accounts Payable (June month purchase *35%) (84900*35%) = $29,715

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.