Thornton, Inc. sells fireworks. The companys 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	$72,000	$82,000	$92,000	$98,000

Thornton had a beginning inventory balance of $3,400 on April 1 and a beginning balance in accounts payable of $14,200. The company desires to maintain an ending inventory balance equal to 20 percent of the next periods cost of goods sold. Thornton makes all purchases on account. The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the month following purchase.

Required

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

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

3. Prepare a schedule of cash payments for inventory for April, May, and June.

4. Determine the balance in accounts payable Thornton will report on the end-of

Inventory Purchases Budget	April	May	June
Budgeted cost of goods sold	$72,000	$82,000	$92,000
Plus: Desired ending inventory
Inventory needed	72,000	82,000	92,000
Less: Beginning inventory	3,400
Required purchases (on account)	$68,600	$82,000	$92,000

Ending inventory

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

Accounts payable