ACCT $254$

Schedule of Cash Collections Assignment

Sound Effects Audio Systems sells and installs car stereo systems. Managers need to prepare an inventory purchases budget for the first quarter of $2014.$ The company's sales budget for the first quarter is provided below:

$\backslash$table$[[,,$nuary,,buaary,March$],[\backslash$table$[[$Budgeted$],[$Sales$]],$$$,200,000,$$$,196,000,180,000]]$

Based on past experience the company expects the cost of goods sold to equal $80\%$ of sales. Furthermore, the ending inventory balance each month should be $$8,000$ plus $20\%$ of the current period's cost of goods sold. The inventory balance on December $31,2013$ was $$34,000.$ The company makes all purchases on account and pays $60\%$ of accounts payable in the month of purchase and the remaining $40\%$ in the next month. Accounts payable stood at $$36,000$ at December $31,2013.$

Required:

Prepare an inventory purchases budget for January, February, and March of $2014.$

Determine the amount of ending inventory and the accounts payable balance that will appear on the March $31,2014$ pro forma balance sheet.

Prepare a schedule of cash payments for inventory for January, February, and March, $2014.$