Question

Fanning Books expects to purchase the following supplies:

	April			May			June
Required purchases (on account)	$	112,000		$	132,000		$	144,000

Fanning Books’s accountant prepared the following schedule of cash payments for supplies purchases. Fanning Books’s 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

1. Complete the schedule of cash payments for supplies purchases by filling in the missing amounts.

2. Determine the amount of accounts payable the company will report on its pro forma balance sheet at the end of the second quarter.

Required A Required B Complete the schedule of cash payments for supplies purchases by filling in the missing amounts. June Schedule of Cash Payments for Supplies Purchases April May Payment for current accounts payable $ 95,200 Payment for previous accounts payable 9,000 Total budgeted payments for supplies $ 104,200 < Required A Required Β Σ .

Answer 1

A.

Schedule of cash payment for supplies purchases

	April	May	June
Payment for current accounts payable	112,000 x 85% = 95,200	132,000 x 85% = 112,200	144,000 x 85% = 122,400
Payment for previous accounts payable	9,000	112,000 x 15% = 16,800	132,000 x 15% = 19,800
Total budgeted payment for supplies	$104,200	$129,000	$142,200

B.

Accounts payable to be reported in the balance sheet = 144,000 x 15%

= $21,600

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