The Goldenrod Company offers a broad range of clothing it sells in a four-state area. Sales for the four quarters of 2024 are expected to be $230,000, $350,000, $390,000, and $425,000, for an annual total of $1,395,000. Cost of goods sold averages 60% of sales. Ending inventory for each quarter should be 25% of cost of goods sold for the following quarter. Inventory at January 1 is expected to be $40,000. Required:

a. Show calculations for ending inventory, purchases, and cost of goods sold for the first three quarters of 2023.

b. Explain in your own words why you could not perform the same calculations for the fourth quarter that you performed for the first three.

c. Briefly explain in your own words how the company might need to revise these budget figures if inflation declines dramatically between October 2023 and June 2024.