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Jordan, Inc. sells fireworks. The company’s marketing director developed the following cost of goods sold budget...

Jordan, 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 $64,000 $74,000 $84,000 $90,000

Jordan had a beginning inventory balance of $2,900 on April 1 and a beginning balance in accounts payable of $14,100. The company desires to maintain an ending inventory balance equal to 20 percent of the next period’s cost of goods sold. Jordan makes all purchases on account. The company pays 65 percent of accounts payable in the month of purchase and the remaining 35 percent in the month following purchase.  

Required

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

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

Business   Accounting   
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Answer #1
Inventory purchases budget :
April May June
B COGS 64000 74000 84000
Des End Inv 14800 16800 18000
Total reqd 78800 90800 102000
Less: Op Inv 2900 14800 16800
Inv to purchase 75900 76000 85200
Amount of ending inventory to report in B/s: $18000
Cash payment to Inventory :
April May June
Purchases 75900 76000 85200
Payt of Mar 14100
Apr 49335 26565
May 49400 26600
Jun 55380
Total payment 63435 75965 81980
Balance in AP at the end of quarter: =85200*0.35=$29820
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