Spencer Inc. sells tire rims. Its sales budget for the nine months ended September 30, 2008, 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 \(\$ 20,000\) 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 \(\$ 19,000\).

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.

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