E22-31 (similar to)Question Help

Tremont, Inc. sells tire rims. Its sales budget for the nine months ended September 30, 2018, and additional informationfollow:

Pre..pare aninventory, purchases, and cost of goods sold budget for each of the first three quarters of the year. Compute cost of goods sold for the entirenine-month period.

Data Table

Quarter Ended

Nine-Month

March 31

June 30

September 30

Total

Cash sales, 40%

$50,000

$70,000

$60,000

$180,000

Credit sales, 60%

75,000

105,000

90,000

270,000

Total sales

MARCH $125,000

JUNE $175,0000

SEPTEMBER $150,000

TOTAL $450,000

More Info

In thepast, cost of goods sold has been40% of total sales. The director of marketing and the financial vice president agree that eachquarter's ending inventory should not be below $10,000 plus10% of cost of goods sold for the following quarter. The marketing director expects sales of $225,000 during the fourth quarter. The January 1 inventory was $37,000.