Rundle Books buys books and magazines directly from publishers and distributes t
ID: 2542884 • Letter: R
Question
Rundle Books buys books and magazines directly from publishers and distributes them to grocery stores. The wholesaler expects to purchase the following inventory: April $111, 000 May $131, 000 Required purchases on account) $143, 000 Rundle Books's accountant prepared the following schedule of cash payments for inventory purchases. Rundle 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 Required a. Complete the schedule of cash payments for inventory purchases by filling in the missing amounts b. Determine the amount of accounts payable the company will report on its pro forma balance sheet at the end of the second quarter. Complete this question by entering your answers in the tabs below. Required ARequired B Complete the schedule of cash payments for inventory purchases by filling in the missing amounts Schedule of Cash Payments for Inventory Purchases April $ 94,350 May June Payment for current accounts payable Payment for previous accounts payable Total budgeted payments for inventory 14,000 $ 108,350Explanation / Answer
a) Schedule of cash payments for Inventory purchases (Amounts in $)
Workings:
1) Payment for current Accounts payable in May = May purchases*85%
= $131,000*85% = $111,350
Payment for previous accounts payable in May = April purchases*15%
= $111,000*15% = $16,650
2) Payment for current Accounts payable in June = June purchases*85%
= $143,000*85% = $121,550
Payment for previous accounts payable in June = May purchases*15%
= $131,000*15% = $19,650
b) At the end of second quarter company will report accounts payable for the month of june (i.e. 15% of june purchases)
Accounts Payable at the end of second quarter = June purchases*15%
= $143,000*15% = $21,450
Particulars April May June Payment for current accounts payable (85% of current month purchases) (i) 94,350 111,350 121,550 Payment for previous accounts payable (15% of last month purchases) (ii) 14,000 16,650 19,650 Total budgeted payments for inventory [(i)+(ii)] 108,350 128,000 141,200Related Questions
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