Exercise 7-7A Preparing an inventory purchases budg Lumpkin Company sells lamps and other lighting fixtures. The purchasing department manager pre- pared the following inventory purchases budget. Lumpkin's policy is to maintain an ending inventory balance equal to 10 percent of the following month's cost of goods sold. April's budgeted cost of goods sold is $40,000. Budgeted cost of goods sold Plus: Desired ending inventory Inventory needed Less: Beginning inventory Required purchases (on account) January $30,000 3,200 33,200 6,000 $27,200 February $32,000 March $35,000 ? Planning for Profie Required 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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
Exercise 7-7A Preparing an inventory purchases budget
Lumpkin Company sells lamps and other lighting fixtures. The purchasing department manager pre-
pared the following inventory purchases budget. Lumpkin's policy is to maintain an ending inventory
balance equal to 10 percent of the following month's cost of goods sold. April's budgeted cost of
goods sold is $40,000.
Budgeted cost of goods sold
Plus: Desired ending inventory
Inventory needed
Less: Beginning inventory
Required purchases (on account)
January
$30,000
3,200
33,200
6,000
$27,200
February
$32,000
4-41
March
$35,000
?
Planning for Profit at
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.
Transcribed Image Text:Exercise 7-7A Preparing an inventory purchases budget Lumpkin Company sells lamps and other lighting fixtures. The purchasing department manager pre- pared the following inventory purchases budget. Lumpkin's policy is to maintain an ending inventory balance equal to 10 percent of the following month's cost of goods sold. April's budgeted cost of goods sold is $40,000. Budgeted cost of goods sold Plus: Desired ending inventory Inventory needed Less: Beginning inventory Required purchases (on account) January $30,000 3,200 33,200 6,000 $27,200 February $32,000 4-41 March $35,000 ? Planning for Profit at 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.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Financial Reporting in Hyperinflationary Economies
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education