Solomon, Incorporated 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 $71,000 $81,000 $91,000 $97,000
Solomon had a beginning inventory balance of $2,900 on April 1 and a beginning balance in accounts payable of $14,900. The company desires to maintain an ending inventory balance equal to 15 percent of the next period’s cost of goods sold. Solomon 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.