Humboldt Inc sells fireworks The companys marketing director

Humboldt, Inc. sells fireworks. The company\'s marketing director developed the following cost of goods sold budget for April, May, June, and July AprilMay $37,500 $34,000 June Budgeted cost of goods sold $30,000 $45,000 Humboldt had a beginning inventory balance of $1,800 on April 1 and a beginning balance in accounts payable of $7400. 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. 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 CRequired D Prepare an inventory purchases budget for April, May, and Junee Inventory Purchases Budget Budgeted cost of goods sold April May June 37,500 34,000 30,000

Solution

a INVENTORY PURCHASE BUDGET April May June July A Budgeted cost of goods sold $37,500 $34,000 $30,000 $45,000 B Beginning inventory balance $1,800 $3,400 $3,000 C End of month inventory balance $3,400 $3,000 $4,500 D=A+C-B Purchase required $39,100 $33,600 $31,500 b Ending inventory at end of quarter $4,500 (0.1*45000) c SCHEDULE OF CASH PAYMENTS FOR INVENTORY A Purchase $39,100 $33,600 $31,500 B Beginning Accounts payable $1,800 $15,640 $13,440 C=0.4*A Ending accpounts payable $15,640 $13,440 $12,600 D=A+B-C Cash Payment during the month $25,260 $35,800 $32,340 d Ending account payable balance of the quarter $12,600 (0.4*31500)