Humboldt, Inc. sells fireworks. The company's marketing director developed the following cost of goods sold budget for
Question:
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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.
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...
Step by Step Answer:
a Inventory Purchases Budget April May June Budgeted cost of goods sold 37...View the full answer
Fundamental Managerial Accounting Concepts
ISBN: 978-1259569197
8th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Olds
