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

Quarter Ended

Nine-Month

March 31 June 30 September 30 Total

Cash sales, 20% $20,000 $30,000 $25,000 $75,000

Credit sales, 80% 80,000 120,000 100,000 300,000

Total sales $100,000 $150,000 $125,000 $375,000

Prepare an inventory, purchases, and cost of goods sold budget for each of the first three quarters of the year. Compute cost of goods sold for the entire nine-month period.

In the past, cost of goods sold has been 40% of total sales. The director of marketing and the financial vice president agree that each quarter's ending inventory should not be below $9,000 plus 10% of cost of goods sold for the following quarter. The marketing director expects sales of $200,000 during the fourth quarter. The January 1 inventory was $16,000.