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Zachary, Inc. sells fireworks. The companys marketing director developed the following cost of goods sold budget for April, May, June, and July. April May June

Zachary, 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 $79,000 $89,000 $99,000 $105,000

Zachary had a beginning inventory balance of $4,000 on April 1 and a beginning balance in accounts payable of $15,700. The company desires to maintain an ending inventory balance equal to 15 percent of the next periods cost of goods sold. Zachary 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

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

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

A

Inventory Purchases Budget April May June
Budgeted cost of goods sold $79,000 $89,000 $99,000
Plus: Desired ending inventory not attempted not attempted not attempted
Inventory needed 79,000 89,000 99,000
Less: Beginning inventorys not attempted not attempted not attempted
Required purchases (on account) $79,000 $89,000 $99,000

B

Ending inventory

C

Schedule of Cash Payments April May June
Payment of current accounts payable not attempted not attempted not attempted
Payment of previous accounts payable not attempted not attempted not attempted
Total budgeted payments for inventory $0 $0 $0

D

Ending inventory

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