Vivian Books buys books and magazines directly from publishers and distributes t

Question

Vivian Books buys books and magazines directly from publishers and distributes them to grocery stores. The wholesaler expects to purchase the following inventory.

      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 purchase; the remaining 15 percent are paid in the month following the month of purchase.

Complete the schedule of cash payments for inventory purchases by filling in the missing amounts.

Determine the amount of accounts payable the company will report on its pro forma balance sheet at the end of the second quarter.

Vivian Books buys books and magazines directly from publishers and distributes them to grocery stores. The wholesaler expects to purchase the following inventory.

Explanation / Answer

a) Schedule of Cash Payments Particulars April May June Total Required Purchases        110,000.00           130,000.00        142,000.00    382,000.00 Payment in same month @85% (a)           93,500.00           110,500.00        120,700.00    324,700.00 Payment in next month @15%   (b)             16,500.00          19,500.00      36,000.00 Total Payments a +   b           93,500.00           127,000.00        140,200.00    360,700.00 b) Purchases in June        142,000.00 Payment in June for June Purchases @85%        120,700.00 Accounts Payable at end of Qtr           21,300.00

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