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 $105,000. Budgeted Cost of Goods Sold Plus: Desired Ending Inventory Inventory Needed Less: Beginning Inventory Required purchases (on Account) What would be the required purchases (on account) for December? Multiple Choice $88,000 October 95,000 11,250 106,250 14,250 92,000 $75,000 November December 75,000 85,000 ? ? ? ? ? ? ? ?

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 $105,000. Budgeted Cost of Goods Sold Plus: Desired Ending Inventory Inventory Needed Less: Beginning Inventory Required purchases (on Account) What would be the required purchases (on account) for December? Multiple Choice $88,000 October 95,000 11,250 106,250 14,250 92,000 $75,000 November December 75,000 85,000 ? ? ? ? ? ? ? ?

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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Do not include the month of May in solving. Do it nicely.
Xcom is a small retailer that sells phone cases. The following estimates are available for the coming period: Month Budgeted Sales (Units) April 40,000 May 50,000 June 44,000 Notes: Opening cash balance for the month of May is expected to be $9,250. Inventory policy- ending inventory of finished goods equal to 25% of that month’s sales. Budgeted selling price per case- $40 Purchase price per case - $10 (purchase volume greater than 30,000 cases per month will receive a 5% discount). Collections from customers: 80% in the month of sale 20% one month after the sale Monthly operating expenses are budgeted at: Marketing $20,000 per month Sales commission (5% of Total Sales Collection for the month) Administration cost per month is $18,000. This includes depreciation of $2,000 per month. All expenses and purchases are paid in the month incurred unless otherwise specified. Required: For the month of May, you have been asked to prepare: Purchases…
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Metro, Incorporated sells backpacks. The Company's accountant is preparing the purchases budget for the first quarter operations. Metro maintains ending inventory at 15% of the following month's expected cost of goods sold. Expected cost of goods sold for April is $78,000. All purchases are made on account with 30% of accounts paid in the month of purchase and the remaining 70% paid in the month following the month of purchase. Sales January $ 44,000 February $ 58,000 Budgeted cost of goods sold Plus: Desired ending inventory Inventory needed Less: Beginning inventory March $ 64,000 8,700 52,700 (6,600) Required purchases $ 43,900 Based on this information the amount of accounts payable appearing on the March 31 pro forma balance sheet is Multiple Choice $19,830. $46,270. $66,100. None of the answers is correct.
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Old Antique Store prepared the following budget information for the month of May: Sales are budgeted at $303,000. All sales are on account and a provision for bad debts is made for each month at three percent of sales for the month. Inventory was $91,000 on April 30; an inventory increase of $17,000 is planned for May 31. All inventory is marked to sell at cost plus 50 percent. Estimated cash disbursements for selling and administrative expenses for the month are $55,000. Depreciation for May is projected at $6,700. Old Antique's budgeted cost of inventory purchases for May is:Multiple Choice $101,000. $151,500. $203,200. $219,000. $202,000.
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