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In: Accounting

Franklin, Inc. sells fireworks. The company’s marketing director developed the following cost of goods sold budget...

Franklin, Inc. sells fireworks. The company’s marketing director developed the following cost of goods sold budget for April, May, June, and July.

April May June July
Budgeted cost of goods sold $73,000 $83,000 $93,000 $99,000

Franklin had a beginning inventory balance of $3,800 on April 1 and a beginning balance in accounts payable of $15,100. The company desires to maintain an ending inventory balance equal to 15 percent of the next period’s cost of goods sold. Franklin 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

  1. Prepare an inventory purchases budget for April, May, and June.

  2. Determine the amount of ending inventory Franklin will report on the end-of-quarter pro forma balance sheet.

  3. Prepare a schedule of cash payments for inventory for April, May, and June.

  4. Determine the balance in accounts payable Franklin will report on the end-of-quarter pro forma balance sheet.

  • Required A
  • Required B
  • Required C
  • Required D

Prepare an inventory purchases budget for April, May, and June.
Inventory Purchases Budget April May June
Budgeted cost of goods sold $73,000 $83,000 $93,000
Inventory needed
Required purchases (on account)

Determine the amount of ending inventory Franklin will report on the end-of-quarter pro forma balance sheet.
Ending inventory

Prepare a schedule of cash payments for inventory for April, May, and June. (Round your final answers to the nearest whole dollar.)
Schedule of Cash Payments April May June
Payment of current accounts payable
Payment of previous accounts payable
Total budgeted payments for inventory

Determine the balance in accounts payable Franklin will report on the end-of-quarter pro forma balance sheet.
Accounts payable

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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