Sentra Sporting Company sells tennis rackets and other sporting equipment. The purchasing department manager prepared the inventory purchases budget. Sentra's policy is to maintain an ending inventory balance equal to 15% of the following month's cost of goods sold. January's budgeted cost of goods sold is $165,000.| | October | November | December ||-----------------------|---------|----------|----------|| Budgeted Cost of Goods Sold | 155,000 | 135,000 | 145,000 || Plus: Desired Ending Inventory | 20,250 | ? | ? || Inventory Needed | 175,250 | ? | ? || Less: Beginning Inventory | 23,250 | ? | ? || Required purchases (on Account) | 152,000 | ? | ? |*Note: Desired Ending Inventory for October is 15% of November’s Cost of Goods Sold (135,000), which is 20,250. Similarly, the calculation should be followed for November and December.***Question:**What is the amount of cost of goods sold the company will report on its fourth quarter pro forma income statement?**Multiple Choice:**- $470,100- $290,000

The question is based on the concept of cost accounting.

Sentra Sporting Company sells tennis rackets and other sporting equipment. The purchasing department manager prepare. the inventory purchases budget. Sentra's policy is to maintain an ending inventory balance equal to 15% of the following month's cost of goods sold. January's budgeted cost of goods sold is $165,000. Budgeted Cost of Goods Sold Plus: Desired Ending Inventory Inventory Needed Less: Beginning Inventory Required purchases (on Account) October 155,000 20,250 175,250 23,250 152,000 November 135,000 ? ? ? ? December 145,000 ? ? ? ? What is the amount of cost of goods sold the company will report on its fourth quarter pro forma income statement?

Sentra Sporting Company sells tennis rackets and other sporting equipment. The purchasing department manager prepare. the inventory purchases budget. Sentra's policy is to maintain an ending inventory balance equal to 15% of the following month's cost of goods sold. January's budgeted cost of goods sold is $165,000. Budgeted Cost of Goods Sold Plus: Desired Ending Inventory Inventory Needed Less: Beginning Inventory Required purchases (on Account) October 155,000 20,250 175,250 23,250 152,000 November 135,000 ? ? ? ? December 145,000 ? ? ? ? What is the amount of cost of goods sold the company will report on its fourth quarter pro forma income statement?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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