Question

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 $76,000. 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. Req A Req B and C Complete the inventory purchases budget by filling in the missing amounts. March $ 70,000 Inventory Purchases Budget January February Budgeted cost of goods sold $ 60,000 $ 64,000 Plus: Desired ending inventory 9,600 Inventory needed 69,600 Less: Beginning inventory Required purchases (on account) $ 60,600 9,000 < ReqA Req B and C >

Answer 1

Inventory Purchases Budget
	January	February	March
Budgeted cost of goods sold	60000	64000	70000
Plus : Desired ending inventory [ 15 * Following month's cost of goods sold ]	9600	10500	11400 [ 15% * 76000 ]
Inventory needed	69600	74500	81400
Less : Beginning inventory	9000	9600	10500
Required purchases (on account)	60600	64900	70900

Req B :
Cost of goods sold to be reported on first quarter pro forma income statement = 60000 + 64000 + 70000	194000
Req C :
Ending inventory to be reported on first quarter pro forma balance sheet	11400