Exercise 14-8 Preparing a schedule of cash payments for inventory purchases LO 1

Question

Exercise 14-8 Preparing a schedule of cash payments for inventory purchases LO 14-3 Vivian Books buys books and magazines directly from publishers and distributes them to grocery stores The wholesaler expects to purchase the following inventory Required purchases (on account) $107,000 $127,000 $139,000 Vivian Books's accountant prepared the following schedule of cash payments for inventory purchases Vivian Books's suppliers require that 85 percent of purchases on account be paid in the month of puchase; the remaining 15 percent are paid in the month following the month of purchase. a. Complete the schedule of cash payments for inventory purchases by filling in the missing amounts Schedule of Cash Payments for Inventory Purchases April May June Payment for current accounts payable $ 90,950 Payment for previous accounts payable 12,000 Total budgeted payments for inventory $102,950 b. Determine the amount of accounts payable the company will report on its pro forma balance sheet at the end of the second quarter 0 Type here to search

Explanation / Answer

a.

Payment for current accounts payable = Current month × 85%

Payment for previous accounts payable = Previous month × 15%

b. Amount of accounts payable the company will report on the pro forma balance sheet at the end of second quarter = 139,000×15% = $20,850

Schedule of Cash Payments for Inventory Purchases April May June Payment for current accounts payable $90,950 $107,950 $118,150 Payment for previous accounts payable 12,000 16,050 19,050 Total budgeted payments for inventory $102,950 $124,000 $137,200

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