Aretes Company expects to sell 7,500 units for $150 each for a total of $1,125,000 in January and 3,200 units for $230 each for a total of $736,000 in February. The company expects cost of goods sold to average 60% of sales revenue, and the company expects to sell 4,200 units in March for $290 each. Aretes' target ending inventory is $10,000 plus 60% of the next month's cost of goods sold. Prepare Aretes' inventory, purchases, and cost of goods sold budget for January and February.

Aretes Company

Inventory, Purchases, and Cost of Goods Sold Budget

Two months Ended January 31 and February 28

January

February

Cost of goods sold

Plus: Desired ending merchandise inventory

Total merchandise inventory required

Less: Beginning merchandise inventory

Budgeted purchases