Spencer Company sells lamps and other lighting fixtures. The purchasing department manager prepared the following inventory purchases budget. Spencer'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 $79,000. Required a. Complete the inventory purchases budget by filling in the missing amounts. Inventory Purchases Budget Budgeted cost of goods sold Plus: Desired ending inventory Inventory needed Less: Beginning inventory Required purchases (on account) Cost of goods sold January February $ 56,000 60,000 $ 9,000 65,000 8,400 Ending inventory $ 56,600 March $ b. Determine the amount of cost of goods sold the company will report on its first quarter pro forma income statement. 66,000 c. Determine the amount of ending inventory the company will report on its pro forma balance sheet at the end of the first quarter.
Spencer Company sells lamps and other lighting fixtures. The purchasing department manager prepared the following inventory purchases budget. Spencer'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 $79,000. Required a. Complete the inventory purchases budget by filling in the missing amounts. Inventory Purchases Budget Budgeted cost of goods sold Plus: Desired ending inventory Inventory needed Less: Beginning inventory Required purchases (on account) Cost of goods sold January February $ 56,000 60,000 $ 9,000 65,000 8,400 Ending inventory $ 56,600 March $ b. Determine the amount of cost of goods sold the company will report on its first quarter pro forma income statement. 66,000 c. Determine the amount of ending inventory the company will report on its pro forma balance sheet at the end of the first quarter.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Spencer Company sells lamps and other lighting fixtures. The purchasing department
manager prepared the following inventory purchases budget. Spencer'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 $79,000.
Required
a. Complete the inventory purchases budget by filling in the missing amounts.
Inventory Purchases Budget
Budgeted cost of goods sold
Plus: Desired ending inventory
Inventory needed
Less: Beginning inventory
Required purchases (on account)
Cost of goods sold
January February
$
56,000 60,000
$
9,000
65,000
8,400
Ending inventory
$
56,600
March
$
b. Determine the amount of cost of goods sold the company will report on its first
quarter pro forma income statement.
66,000
c. Determine the amount of ending inventory the company will report on its pro forma
balance sheet at the end of the first quarter.
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