Question

Check my work Thornton Company sells lamps and other lighting fixtures. The purchasing department manager prepared the following Inventory purchases budget. Thornton's policy is to maintain an ending inventory balance equal to 15 percent of the following month's cost of goods sold. April's budgeted cost of goods sold is $82,000. 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. c. Determine the amount of ending Inventory the company will report on its pro forma balance sheet at the end of the first quarter. Complete this question by entering your answers in the tabs below. Reg A Reg B and C

Answer 1

a)

Purchase budget

	January	February	March
Budgeted cost of goods sold	58,000	62,000	68,000
Plus: Desired ending inventory	9,300	68,000 x 15% = 10,200	82,000 x 15% = 12,300
Inventory needed	67,300	72,200	80,300
Less: Beginning inventory	8,700	9,300	10,200
Required purchases	$58,600	$62,900	$70,100

b)

Cost of goods sold to be reocrded on first quarter income statement = Cost of goods sold for January + Cost of goods sold for February + Cost of goods sold for March

= 58,000 + 62,000 + 68,000

= $188,000

c)

Ending inventory to be reported on the balance sheet at the end of first quarter = $12,300

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