Prepare an inventory purchases and cost of goods sold

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Reference no: EM13571448

Tremont, Inc., sells tire rims. Its sales budget for the nine months ended September 30 follows:


Quarter Ended



March 31

June 30

September 30

Nine-Month Total

Cash sales, 20% .

$ 24,000

$ 34,000

$ 29,000

$ 87,000

Credits sales, 80%

96,000

136,000

116,000

348,000

Total sales, 100%

$ 120,000

$ 170,000

$ 145,000

$ 435,000

In the past, cost of goods sold has been 40% of total sales. The director of marketing and the financial vice president agree that each quarter's ending inventory should not be below $20,000 plus 10% of cost of goods sold for the following quarter. The marketing director expects sales of $220,000 during the fourth quarter. The January 1 inventory was $32,000.

Requirement

1. Prepare an inventory, purchases, and cost of goods sold budget for each of the first three quarters of the year. Compute cost of goods sold for the entire nine month period.

Reference no: EM13571448

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