The company will report $27,200 of accounts payable on its pro forma balance sheet at the end of the second quarter.
Required A
To complete the schedule of cash payments for inventory purchases, we need to calculate the amount of accounts payable that will be paid in each month.
April
Payment for current accounts payable: $140,000 * 90% = $126,000
Payment for previous accounts payable: $120,000 * 10% = $12,000
Total budgeted payments for inventory: $126,000 + $12,000 = $138,000
May
Payment for current accounts payable: $120,000 * 90% = $108,000
Payment for previous accounts payable: $140,000 * 10% = $14,000
Total budgeted payments for inventory: $108,000 + $14,000 = $122,000
June
Payment for current accounts payable: $152,000 * 90% = $136,800
Payment for previous accounts payable: $120,000 * 10% = $12,000
Total budgeted payments for inventory: $136,800 + $12,000 = $148,800
Required B
To determine the amount of accounts payable the company will report on its pro forma balance sheet at the end of the second quarter, we need to calculate the total amount of accounts payable that will be outstanding at the end of June.
Accounts payable at the end of June
Accounts payable for current purchases: $152,000 * 10% = $15,200
Accounts payable for previous purchases: $120,000 * 10% = $12,000
Total accounts payable: $15,200 + $12,000 = $27,200
Therefore, the company will report $27,200 of accounts payable on its pro forma balance sheet at the end of the second quarter.