Fischer Companys purchasing manager, Antonio Sezer, is preparing a purchases budget for the next quarter. At his
Question:
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For budgeting purposes, Fischer estimates that cost of goods sold is 75 percent of sales. The company desires to maintain an ending inventory balance equal to 20 percent of the next period€™s cost of goods sold. The September ending inventory is $80,000. Fischer makes all purchases on account and pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the following month. The balance of accounts payable at the end of September is $75,000.
Required
a. Prepare an inventory purchases budget for October, November, and December.
b. Determine the amount of ending inventory Fischer will report on the end-of-quarter pro forma balance sheet.
c. Prepare a schedule of cash payments for inventory for October, November, and December.
d. Determine the balance in accounts payable Fischer will report on the end-of-quarter pro forma balancesheet.
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 Oct Nov Dec Budgeted cost of goods sold 360000 450000 540000 Plus des...View the full answer
Fundamental Managerial Accounting Concepts
ISBN: 978-0078025655
7th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Old
