Question

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 20 percent of the following month's cost of goods sold. April's budgeted cost of goods sold is $79,000. Required a. Complete the inventory purchases budget by filling in the missing amounts. $ cco Inventory Purchases Budget January February March Budgeted cost of goods sold 59.000 63,000 69,000 Plus: Desired ending inventory 12,600 Inventory needed 71,600 Less: Beginning inventory 11,800 Required purchases (on account) || 59,800

Answer 1

Requirement 1

Inventory purchases budget
	January	February	March
Budgeted cost of goods sold	$ 59,000.00	$ 63,000.00	$ 69,000.00
Plus: Desired ending inventory	$ 12,600.00	$ 13,800.00	$ 15,800.00*
Inventory needed	$ 71,600.00	$ 76,800.00	$ 84,800.00
Less: Beginning inventory	$ 11,800.00	$ 12,600.00	$ 13,800.00
Budgeted Purchases	$ 59,800.00	$ 64,200.00	$ 71,000.00

*79000 x 20%

Requirement 2

Cost of goods sold

191,000.00

Requirement 3

Ending Inventory

$ 15,800.00

Working

b	Cost of goods sold	191,000.00	Total cost of goods sold from January till march
c	Ending Inventory	$ 15,800.00	For March