Baird Inc sells fireworks The companys marketing director de

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

Baird had a beginning inventory balance of $4,400 on April 1 and a beginning balance in accounts payable of $15,200. The company desires to maintain an ending inventory balance equal to 20 percent of the next period’s cost of goods sold. Baird makes all purchases on account. The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the month following purchase.  

Required

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

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

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

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

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

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

Prepare a schedule of cash payments for inventory for April, May, and June. (Round your final answers to the nearest whole dollar.)

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

April May June July Budgeted cost of goods sold $69,000 $79,000 $89,000 $95,000

Solution

1) Inventory Purchase Budget April May   June Budgeted Cost of goods sold $ 69,000 $ 79,000 $     89,000 Plus:Desired ending inventory $ 15,800 $ 17,800 $     19,000 Inventory Needed $ 84,800 $ 96,800 $ 1,08,000 Beginning Inventory $    4,400 $ 15,800 $     17,800 Required Purchases (on account) $ 80,400 $ 81,000 $     90,200 Working: Months April May   June Next Months cost of goods sold $ 79,000 $ 89,000 $     95,000 Ending Inventory - 20% $ 15,800 $ 17,800 $     19,000 2) Amount of ending Inventory on the end of quarter $     19,000 3) Schdule of Cash Payment for Inventory April May   June Payments of Current Accounts Payable $ 56,280 $ 56,700 $     63,140 Payments of previous Accounts Payable $ 15,200 $ 24,120 $     24,300 Total Budgeted payment for Inventory $ 71,480 $ 80,820 $     87,440 Working: a. Months April May   June Required Purchases (on account) $ 80,400 $ 81,000 $     90,200 Payments of Current Accounts Payable-70% $ 56,280 $ 56,700 $     63,140 b. Months April May   June Previous month Purchases (On account) $ 80,400 $     81,000 Payments of previous Accounts Payable-30% $ 15,200 $ 24,120 $     24,300 4) Accounts Payable at the end of quarter $ 27,060 Working: 30% of June \'s Purchases (on account) = $ 90,200 x 30% = $ 27,060