Sound Effects Audio Systems Sells and Installs Car Stereo Systems

question 122

Essay

Sound Effects Audio Systems sells and installs car stereo systems. Managers need to prepare an inventory purchases budget for the first quarter of 2014. The company's sales budget for the first quarter is provided below: $$\begin{array} { | l | r | r | r | } \hline & { \text { January } } &{ \text { February } } & { \text { March } } \\\hline \begin{array} { l } \text { Budgeted } \\\text { Sales }\end{array} &\$200,000 & \$196,000&\$180,000 \\\hline\end{array}$$
Based on past experience the company expects the cost of goods sold to equal 80% of sales. Furthermore, the ending inventory balance each month should be $8,000 plus 20% of the current period's cost of goods sold. The inventory balance on December 31, 2013 was $34,000. The company makes all purchases on account and pays 60% of accounts payable in the month of purchase and the remaining 40% in the next month. Accounts payable stood at $36,000 at December 31, 2013.
Required:
1) Prepare an inventory purchases budget for January, February, and March of 2014.
2) Determine the amount of ending inventory and the accounts payable balance that will appear on the March 31, 2014 pro forma balance sheet.
3) Prepare a schedule of cash payments for inventory for January, February, and March, 2014.

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Definitions:

Erectile Disorder

A condition characterized by the consistent difficulty in achieving or maintaining an erection sufficient for sexual activity.

Acute Erection Dysfunction

A sudden onset of difficulty in achieving or maintaining an erection sufficient for sexual activity.

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A term related to the inadequate or failed blood flow to tissues, often discussed in the context of sexual health, affecting arousal and erection.

Genital-Pelvic Pain/Penetration Disorder

A sexual dysfunction characterized by significant pain during intercourse or penetration attempts, leading to distress or interpersonal difficulty.