Preparing inventory purchases budgets with different assumptions Jenny Neal has been at odds with her brother and business partner, Haley, since childhood. The sibling rivalry is not all bad, however; their garden shop, Neal Gardens and Gifts, has been very successful.

When the partners met to prepare the coming year’s budget, their forecasts were different, naturally.

Their sales revenue estimates follow.

Past experience indicates that cost of goods sold is about 60 percent of sales revenue. The company tries to maintain 15 percent of the next quarter’s expected cost of goods sold as the current quarter’s ending inventory. The ending inventory this year is $25,000. Next year’s ending inventory is budgeted to be $35,000.
Required

a. Prepare an inventory purchases budget using Jenny’s estimate.

b. Prepare an inventory purchases budget using Haley’s estimate.