Fresh Fruits Corporation wholesales peaches and oranges. Beth Fresh is working with the company’s accountant to prepare next year’s budget. Ms. Fresh estimates that sales will increase 5 percent annually for peaches and 10 percent for oranges. The current year’s sales revenue data follow.

Based on the company’s past experience, cost of goods sold is usually 60 percent of sales revenue.
Company policy is to keep 20 percent of the next period’s estimated cost of goods sold as the current period’s ending inventory. 

Required

a. Prepare the company’s sales budget for the next year for each quarter by individual product.

b. If the selling and administrative expenses are estimated to be \($700,000\) , prepare the company’s budgeted annual income statement.

c. Ms. Fresh estimates next year’s ending inventory will be \($34,000\) for peaches and \($56,000\) for oranges. Prepare the company’s inventory purchases budgets for the next year showing quarterly figures by product.

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First Quarter Second Quarter Third Quarter Fourth Quarter Total Peaches Oranges $220,000 400,000 $240,000 450,000 $300,000 570,000 $240,000 380,000 $1,000,000 1,800,000 Total $620,000 $690,000 $870,000 $620,000 $2,800,000