Problem: Stine 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 60,000 70,000 80,000 86,000
Stine had a beginning inventory balance of 3,600 on April 1 and a beginning balance in accounts payable of 14,800. The company desires to maintain an ending inventory balance equal to 10 percent of the next period's cost of goods sold. Stine 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.
Q1. Prepare an inventory purchase budget for April, May, and June
Q2. Determine the amount of ending inventory Stine will report on the end-of -quarter pro forma balance sheet.
Q3. Prepare a schedule of cash payments for Inventory for April, May, and June
Q4. Determine the balance in accounts payable Stine will report on the end or quarter pro forma balance sheet