Question

April May June July $37,500 $34,000 $30,000 $45,000 Budgeted cost of goods sold Humboldt had a beginning inventory balance of $1,800 on April 1 and a beginning balance in accounts payable of $7,400. The company desires to maintain an ending inventory balance equal to 10 percent of the next period's cost of goods sold. Humboldt makes all purchases on account. The company pays 60 percent of accounts payable in the month of purchase and the remaining 40 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 Humboldt 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 Humboldt will report on the end-of-quarter pro forma balance sheet. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Prepare an inventory purchases budget for April, May, and June. Inventory Purchases Budget Budgeted cost of goods sold April $ 37,500 May 34,000 June 30,000 $ $ Inventory needed Required purchases (on account) - Required A Required B >

Answer 1

Required a :
Inventory purchase budget	April	May	June
Budgeted cost of goods sold	37500	34000	30000
(+) Desired ending inventory ( 10% of next period's cost of goods sold )	3400 [ 10%*34000 ]	3000 [ 10%*30000 ]	4500 [ 10%*45000 ]
Inventory needed	40900	37000	34500
(-) Beginning inventory	1800	3400	3000
Required purchases (on account)	39100	33600	31500

Required b :
Ending inventory at the end of quarter = Ending inventory of June	4500

Required c :
Schedule of Cash payments	April	May	June
Payment of current accounts payable	23460 [ 60%*39100 ]	20160 [ 60%*33600 ]	18900 [ 60%*31500 ]
Payment of previous accounts payable	7400	15640 [ 40%*39100 ]	13440 [ 40%*33600 ]
Total budgeted payment for inventory	30860	35800	32340

Required d :
Accounts payable at the end of quarter = 40% * Required purchases of June = 40% * 31500	12600