Question

The purchasing department manager for Thornton Company prepared the following supplies purchases budget. Thornton’s policy is to maintain an ending supplies balance equal to 15 percent of the following month’s supplies expense. April’s budgeted supplies expense is $82,000.

Required

1. Complete the supplies purchases budget by filling in the missing amounts.

2. Determine the amount of supplies expense the company will report on its first quarter pro forma income statement.

3. Determine the amount of ending supplies the company will report on its pro forma balance sheet at the end of the first quarter.

The purchasing department manager for Thornton Company prepared the following supplies purchases budget. Thornton's policy is to maintain an ending supplies balance equal to 15 percent of the following month's supplies expense. April's budgeted supplies expense is $82,000. Required a. Complete the supplies purchases budget by filling in the missing amounts. b. Determine the amount of supplies expense the company will report on its first quarter pro forma income statement c. Determine the amount of ending supplies the company will report on its pro forma balance sheet at the end of the first quarter. Complete this question by entering your answers in the tabs below. Req A Req B and C Complete the supplies purchases budget by filling in the missing amounts. March $ 68,000 Supplies Purchases Budget January February Budgeted supplies expense $ 58,000 $ 62,000 Plus: Desired ending supplies 9,300 Supplies needed 67,300 Less: Beginning supplies 8,700 Required purchases (on $ 58,600 account)

Answer 1

a.

Supplies Purchases Budget
	January	February	March
Budgeted supplies expense	58,000	62,000	68,000
Plus: Desired ending supplies	9,300	68,000 x 15% = 10,200	82,000 x 15% = 12,300
Supplies needed	67,300	72,200	80,300
Less: Beginning supplies	8,700	9,300	10,200
Required purchases (on account)	$58,600	$62,900	$70,100

b.

Supplies expense = Supplies expense for January + Supplies expense for February + Supplies expense for March

= 58,000+62,000+68,000

= $188,000

c.

Supplies to be reported on the balance sheet = $12,300

b.	Supplies expense	$188,000
c.	Ending supplies	$12,300

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