40, ..d 59% i 9:17 PM Documento (9) - Guardando Sound Effects Audio Systems sell

Question

40, ..d 59% i 9:17 PM Documento (9) - Guardando Sound Effects Audio Systems sells and installs. car stereo systems. Managers peed to prepare an entory purcbases budget for thefrst guarter of Year 2. he company's sales budget for the first arter is provided below anuary Fcbruary March Budgctod 200,0005 96.000 130,000 Based on past experience the company expects the cost of goods sold to equal 80% of sales. Furthermore, the ending inventory balance each month should be $8,000 plus 20% of the current period's cost of goods sold. The inventory balance on December 31, Year 1 was $34,000. The company makes all purchases on account and pays 60% of accounts payable in the month of purchase and the remaining 40% in the next month. Accounts payable stood at $36,000 at December 31, Year 1 Required 1) Prepare an inventory purchases budget for January, February. and March of Year 2. Budgeted Cost of Goods Sold Plus Desired Ending Inventory February March Total Inventory Noeded Less Beginning Inventory Required Purchases (on account

Explanation / Answer

Calculate required purchase :

January February march Sales 200000 196000 180000 Cost of goods sold 160000 156800 144000 Add: Desired ending inventory 40000 39360 36800 Total needs 200000 196160 180800 Less; Beginning inventory (34000) (40000) (39360) Required purchase 166000 156160 141440

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