Reference no: EM132617742

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

Problem 1: 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.

Data Table

                                           Quarter Ended            Nine-Month

                                   March 31         June 30           September 30             Total

Cash sales, 40%     $50,000            $70,000            $60,000            $180,000

Credit sales, 60%         75,000         105,000            90,000             270,000

Total sales

MARCH $125,000

JUNE $175,0000

SEPTEMBER $150,000

TOTAL $450,000

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 $10,000 plus 10% of cost of goods sold for the following quarter. The marketing director expects sales of $225,000 during the fourth quarter. The January 1 inventory was $37,000.