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Vernon, Inc. sells fireworks. The companys marketing director developed the following cost of goods sold...

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Accounting

Vernon, Inc. sells fireworks. The companys marketing director developed the following cost of goods sold budget for April, May, June, and July.

April May June July
Budgeted cost of goods sold $70,000 $80,000 $90,000 $96,000

Vernon had a beginning inventory balance of $2,900 on April 1 and a beginning balance in accounts payable of $14,700. The company desires to maintain an ending inventory balance equal to 20 percent of the next periods cost of goods sold. Vernon makes all purchases on account. The company pays 60 percent of accounts payable in the month of purchase and the remaining 40 percent in the month following purchase.

Required

  1. Prepare an inventory purchases budget for April, May, and June.

  2. Determine the amount of ending inventory Vernon will report on the end-of-quarter pro forma balance sheet.

  3. Prepare a schedule of cash payments for inventory for April, May, and June.

  4. Determine the balance in accounts payable Vernon will report on the end-of-quarter pro forma balance sheet.

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