Question

Rooney, Inc. sells fireworks. The company's marketing director developed the following cost of goods sold budget for April, May, June, and July. Budgeted cost of goods sold April $72,000 May $82,000 June $92,000 July $98,000 Rooney had a beginning inventory balance of $3,700 on April 1 and a beginning balance in accounts payable of $14,100. The company desires to maintain an ending inventory balance equal to 20 percent of the next period's cost of goods sold. Rooney 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 a. Prepare an inventory purchases budget for April, May, and June. b. Determine the amount of ending inventory Rooney 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 Rooney will report on the end-of-quarter pro forma balance sheet. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Prepare an inventory purchases budget for April, May, and June. Inventory Purchases Budget Budgeted cost of goods sold April 72,000 May 82,000 June $ 92,000 $ $ Inventory needed Required purchases (on account) Required A Required B

Answer 1

a) Inventory budget

	April	May	June
Cost of goods sold	72000	82000	92000
Add: Desired ending inventory	16400	18400	19600
Total inventory needed	88400	100400	111600
Less; Beginning inventory	-3700	-16400	-18400
Required purchase	84700	84000	93200

b) Ending inventory = 19600

c) Schedule of cash payment

	April	May	June
Schedule of current account payable	59290	58800	65240
Schedule of previous account payable	14100	25410	25200
Total cash disbursement	73390	84210	90440

d) Account payable = 93200*30% = $27960