Question

Preparing a schedule of cash payments for inventory purchases Glendo Grocery buys and sells groceries in a community far from any major city. Travis Glendo, the owner, budgeted the store's purchases as follows: October November December Required purchases (on account) $30,000 $22.500 $40,000 Glendo's suppliers require that 70 percent of accounts payable be paid in the month of purchase. The remaining 30 percent is paid in the month following the month of purchase. Schedule of Cash Payments for Inventory Purchases November December Payment for current accounts payable Payment for previous accounts payable Total budgeted payments for inventory October $21,000 7.500 $28.500 Required a. Complete the schedule of cash payments for inventory purchases by filling in the missing amounts. b. Determine the amount of accounts payable Glendo will report on the store's quarterly pro forma balance sheet.

Answer 1

Answers

• Requirement [a]

	October	November	December
Payment for current accounts payable	$21,000	$15,750	$28,000
Payment for previous accounts payable	$7,500	$9,000	$6,750
Total Budgeted payments for inventory	$28,500	$24,750	$34,750

--Working

	October	November	December
Payment for current accounts payable	=30000*70%	=22500*70%	=40000*70%
Payment for previous accounts payable	7500	=30000*30%	=22500*30%

• Requirement [b]

Amount of Accounts Payable on Balance Sheet

$12,000

[$ 40000 Dec purchase x 30% to be paid in Jan]