Question

Vernon Books buys books and magazines directly from publishers and distributes them to grocery stores. The wholesaler expects to purchase the following inventory: Required purchases (on account) April $116,000 May $136,000 June $148,000 Vernon Books' accountant prepared the following schedule of cash payments for inventory purchases. Vernon Books' suppliers require that 85 percent of purchases on account be paid in the month of purchase; the remaining 15 percent are paid in the month following the month of purchase. Required a. Complete the schedule of cash payments for inventory purchases by filling in the missing amounts. b. Determine the amount of accounts payable the company will report on its pro forma balance sheet at the end of the second quarter.

Answer 1

Schedule of Cash payments for Inventory Purchases Particulars Payment for Current accounts payable Payment for Previous accounts payable Total budgeted payments for Inventory April 98,600 1,15,600$ 15,000 $ 1,13,600 $ 1,33,000$ |Мay June 1,25,800 17,400 $ 20,400 Refer note 1,46,200 Accounts payable for at the end of Second Quarter 22,200 148000 15% Calculations for Previous Accounts payable Note: Previous Accounts payble May 17,400 $ 116000*15% 136000*15% June 20,400