LO 14-3 Exercise 14-7 Preparing an inventory purchases budget Spencer Company sells lamps and other lighting fixtures. The purchasing department manager prepared the following inventory purchases budget. Spencer's policy is to maintain an ending inventory balance equal to 10 percent of the following month's cost of goods sold. April's bud- geted cost of goods sold is $80,000. 3 Budgeted cost of goods sold Plus: Desired ending inventory Inventory needed Less: Beginning Inventory Required purchases (on account) January $60,000 6,400 66,400 6,000 $60,400 February $64,000 ? |-|- ~| Required a. Complete the inventory purchases budget by filling in the missing amounts. b. Determine the amount of cost of goods sold the company will report on its first quarter pro forma income statement. March $70,000 ? Planning for Profit and Cost Control c. Determine the amount of ending inventory the company will report on its pro forma balance sheet at the end of the first quarter. ? ? ? 52

LO 14-3 Exercise 14-7 Preparing an inventory purchases budget Spencer Company sells lamps and other lighting fixtures. The purchasing department manager prepared the following inventory purchases budget. Spencer's policy is to maintain an ending inventory balance equal to 10 percent of the following month's cost of goods sold. April's budgeted cost of goods sold is $80,000. Planning for Profit and Cost Control Required a. Complete the inventory purchases budget by filling in the missing amounts. b. Determine the amount of cost of goods sold the company will report on its first quarter pro forma income statement. c. Determine the amount of ending inventory the company will report on its pro forma balance sheet at the end of the first quarter