Question

Vernon Books expects to purchase the following supplies:

April May June
Required purchases (on account) $ 110,000 $ 130,000 $ 142,000

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

Vernon Books expects to purchase the following supplies: Required purchases (on account) April $110,000 May $130,000 June $14Vernon Books expects to purchase the following supplies: Required purchases (on account) April $110,000 May $130,000 June $14

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Answer #1

Answer-1)-

VERNON BOOKS
Schedule of Cash Payments for Suppliers
For the Three months ending April to June
Particulars April May June
$ $ $
Purchases on account 110000 130000 142000
Cash Paid
85% of purchases to be paid in month of purchase $110000*85%= $93500 $130000*85%= $110500 $142000*85%= $120700
15% of purchases to be paid in month following the month of purchase 0 $110000*15%= $16500 $130000*15%= $19500
Total cash paid to suppliers $93500 $127000 $140200

2)- The amount of accounts payable the company will report on its pro forma balance sheet at the end of the second quarter = $142000*15% = $21300.

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