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

In the past, cost of goods sold has been 60% of total sales. The director of marketing and the financial vice president agree that each quarter’s ending inventory should not be below \($25,000\) plus 10% of cost of goods sold for the following quarter. The marketing director expects sales of \($200,000\) during the fourth quarter. The January 1 inventory was $11,000.

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 ninemonth period.

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Quarter Ended Nine-Month March 31 June 30 September 30 Total Cash sales, 30%..... S Credits sales, 70% ... 30,000 S 45,000 $ 37,500 $ 112,500 70,000 105,000 87,500 262,500 Total sales, 100% $ 100,000 $ 150,000 $ 125,000 $ 375,000