Zachary, Inc. sells fireworks. The company’s marketing director developed the fo
ID: 2541834 • Letter: Z
Question
Zachary, Inc. sells fireworks. The company’s marketing director developed the following cost of goods sold budget for April, May, June, and July.
Zachary had a beginning inventory balance of $2,600 on April 1 and a beginning balance in accounts payable of $15,400. The company desires to maintain an ending inventory balance equal to 15 percent of the next period’s cost of goods sold. Zachary 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 Zachary 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 Zachary will report on the end-of-quarter pro forma balance sheet.
April May June July Budgeted cost of goods sold $63,000 $73,000 $83,000 $89,000Explanation / Answer
1) Inventory Purchase Budget April May June Quarter Budgeted cost of goods sold 63,000 73,000 83,000 219,000 Add:ending inventory 10950 12450 13350 13,350 total needs 73,950 85,450 96,350 232,350 less:Beginning inventory -2,600 -10,950 -12,450 -2,600 purchases required 71,350 74,500 83,900 229,750 2) ending inventory to be reported $13,350 3) Schedule of cash disbursement April May June Quarter From accounts payable 15,400 15,400 From april 46377.5 24972.5 71350 From May 48425 26075 74500 From june 54535 54535 total cash disbursement 61,777.5 73397.5 80610 215,785 (please round your answers if required) 4) Balance in accounts payab;e 83900*35%= 29365
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