Perez, Inc. sells fireworks. The companys marketing director developed the following cost of goods sold budget for April, May, June, and July. (Please explain the problem in details and step by step, especially how you obtain the "Desired Ending Inventory" & "Beginning Inventory" from requirement A)...

	April	May	June	July
Budgeted cost of goods sold	$71,000	$81,000	$91,000	$97,000

Perez had a beginning inventory balance of $3,300 on April 1 and a beginning balance in accounts payable of $13,900. The company desires to maintain an ending inventory balance equal to 15 percent of the next periods cost of goods sold. Perez 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 Perez 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 Perez will report on the end-of-quarter pro forma balance sheet.

Requirement A

Inventory Purchases Budget	April	May	June
Budgeted cost of goods sold	$71,000	$81,000	$91,000
Plus: Desired ending inventory
Inventory needed	71,000	81,000	91,000
Less: Beginning inventory
Required purchases (on account)	$71,000	$81,000	$91,000

Requirement B

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

What is the ending inventory?

	Ending inventory

Requirement C

Prepare a schedule of cash payments for inventory for April, May, and June. (Round your final answers to the nearest whole dollar.)

Schedule of Cash Payments	April	May	June
Payment of current accounts payable
Payment of previous accounts payable
Total budgeted payments for inventory	$0	$0	$0

Requirement D

Determine the balance in accounts payable Perez will report on the end-of-quarter pro forma balance sheet.

	Accounts payable