Exercise 7-8A Preparing a schedule of cash payments for inventory purchases LO 7

Question

Exercise 7-8A Preparing a schedule of cash payments for inventory purchases LO 7-3 Baird Books buys books and magazines directly from publishers and distributes them to grocery stores. The wholesaler expects to $107,000 $127,000 $139,000 that 90 percent of purchases on account be paid in the month of purchase; the remaining 10 percent are paid in the month following ine the amount of accounts payable the company will report on its pro forma balance sheet at the end of the second quarter of Prev 5of 9

Explanation / Answer

a.

b.

Accounts payable at the end of quater 2 = 139000x.1 = 13900 i.e payment for june month (10%)

which will be made in next month

Particulars april may calculation june calculation Payment for current account payable 96300 114300 127000x.9 125100 139000x.9 Payment for previous account payable 8000 10700 107000x.1 12700 127000x.1 Total budgeted payment 104300 125000 137800

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