Big Apple Sporting Goods is a retail store that sells a variety of sports equipment. The companys fiscal year ends on December 31. Information to be used for the operating budget this coming year follows.

Sales and Merchandise Purchases Budget Information

• Sales for this coming year ending December 31 are expected to be as follows:

First quarter	$600,000
Second quarter	$650,000
Third quarter	$660,000
Fourth quarter	$800,000

• Cost of goods sold is 40 percent of sales (this is the first line of the merchandise purchases budget). Merchandise inventory is maintained at a level equal to 20 percent of the next quarters cost of goods sold. Merchandise inventory at the end of the fourth quarter budget period is estimated to be $55,000.

• 	Quarter
  	1	2	3	4	Year Total
  Sales revenue
  	Quarter
  	1	2	3	4	Year Total
  Budgeted cost of goods sold
  Add desired ending merchandise inventory
  Total merchandise inventory needed
  Deduct beginning merchandise inventory
  Merchandise to be purchased