Question
In: Accounting
Campbell, Inc. sells fireworks. The company’s marketing director developed the following cost of goods sold budget...
Campbell, 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 | $77,000 | $87,000 | $97,000 | $103,000 |
Campbell had a beginning inventory balance of $4,400 on April 1 and a beginning balance in accounts payable of $14,900. The company desires to maintain an ending inventory balance equal to 15 percent of the next period’s cost of goods sold. Campbell 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
A. Prepare an inventory purchases budget for April, May, and June.
B. Determine the amount of ending inventory Campbell will report on the end-of-quarter pro forma balance sheet.
C. Prepare a schedule of cash payments for inventory for April, May, and June.
D. Determine the balance in accounts payable Campbell will report on the end-of-quarter pro forma balance sheet.
A. Prepare an inventory purchases budget for April, May, and June.
|
B. Ending Inventory:
C. Prepare a schedule of cash payments for inventory for April, May, and June. (Round your final answers to the nearest whole dollar.)
|
D. Accounts Payable
Solutions
Expert Solution
| Solutioin: | |||||||||
| Part 1 --- Inventory Purchase Budget | |||||||||
| Inventory Purchase Budget | |||||||||
| April | May | June | Quarter End | ||||||
| Budgeted cost of goods sold | 77000 | 87000 | 97000 | ||||||
| Plus: Ending balance of inventory (15% of Next month's COGS) | 13050 | 14550 | 15450 | ||||||
| Total needs | 90050 | 101550 | 112450 | ||||||
| Less: Beginning balance of inventory (Ending balance of last month) | 4400 | 13050 | 14550 | ||||||
| Required inventory purchases | 85650 | 88500 | 97900 | 272050 | |||||
| Part 2 – the amount of ending inventory Humboldt will report on the end-of-quarter pro forma balance sheet = Ending Inventory of June month = %15450 (103000*15%) | |||||||||
| Part 3 --- schedule of cash payments for inventory for April, May, and June | |||||||||
| schedule of cash payments for inventory for April, May, and June | |||||||||
| April | May | June | Quarter End | ||||||
| March Accounts Payable | $ 14,900.00 | ||||||||
| April Purchases | $ 55,672.50 | $ 29,977.50 | |||||||
| 85650*65% | 85650*35% | ||||||||
| $ 57,525.00 | $ 30,975.00 | ||||||||
| 88500*65% | 88500*35% | ||||||||
| June Purchases | $ 63,635.00 | ||||||||
| 97900*65% | |||||||||
| Total cash payments for Inventory purchases | $ 70,572.50 | $ 87,502.50 | $ 94,610.00 | $ 99,000.00 | |||||
| Part 4 --- the balance in accounts payable Humboldt will report on the end-of-quarter pro forma balance sheet = 35% of June purchase inventory = 97900*35% = | $ 34,265.00 | ||||||||
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