Rooney, Inc. sells fireworks. The company's 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 $64,000 $74,000 $84,000 $90,000 Rooney had a beginning inventory balance of $3,100 on April 1 and a beginning balance in accounts payable of $14,700. The company desires to maintain an ending inventory balance equal to 15 percent of the next period's cost of goods sold. Rooney makes all purchases on account. The company pays 65 percent of accounts payable in the month of purchase and the remaining 35 percent in the month following purchase. Required 1. Prepare an inventory purchases budget for April, May, and June. Determine the amount of ending inventory Rooney will report on the end-of-quarter pro forma balance sheet. Prepare a schedule of cash payments for inventory for April, May, and June. Determine the balance in accounts payable Rooney will report on the end-of-quarter pro forma balance sheet.

Rooney, Inc. sells fireworks. The company's 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 $64,000 $74,000 $84,000 $90,000 Rooney had a beginning inventory balance of $3,100 on April 1 and a beginning balance in accounts payable of $14,700. The company desires to maintain an ending inventory balance equal to 15 percent of the next period's cost of goods sold. Rooney makes all purchases on account. The company pays 65 percent of accounts payable in the month of purchase and the remaining 35 percent in the month following purchase. Required 1. Prepare an inventory purchases budget for April, May, and June. Determine the amount of ending inventory Rooney will report on the end-of-quarter pro forma balance sheet. Prepare a schedule of cash payments for inventory for April, May, and June. Determine the balance in accounts payable Rooney will report on the end-of-quarter pro forma balance sheet.

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter7: Inventories

Section: Chapter Questions

Problem 4CP: Golden Eagle Company began operations on April 1 by selling a single product. Data on purchases and...

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

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Rooney, Inc. sells fireworks. The company's 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 $64,000 $74,000 $84,000 $90,000
Rooney had a beginning inventory balance of $3,100 on April 1 and a beginning balance in accounts payable of $14,700.
The company desires to maintain an ending inventory balance equal to 15 percent of the next period's cost of goods sold.
Rooney makes all purchases on account. The company pays 65 percent of accounts payable in the month of purchase and
the remaining 35 percent in the month following purchase.
Required
1. Prepare an inventory purchases budget for April, May, and June.
Determine the amount of ending inventory Rooney will report on the end-of-quarter pro forma balance sheet.
Prepare a schedule of cash payments for inventory for April, May, and June.
Determine the balance in accounts payable Rooney will report on the end-of-quarter pro forma balance sheet.

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