College Logos buys logo-imprinted merchandise and then sells it to university bookstores. Sales are expected to be $ 2 comma 009 comma 000 in September, $ 2 comma 240 comma 000 in October, $ 2 comma 379 comma 000 in November, and $ 2 comma 520,000 in December. College Logos sets its prices to earn an average 40% gross profit on sales revenue. The company does not want inventory to fall below $ 425 comma 000 plus 15% of the next month's cost of goods sold.Required:Prepare a cost of goods sold, inventory, and purchases budget for the months of October and November.

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anthougo anthougo · Answer 1 · 2020-08-05T03:31:15+02:00

Answer:

College Logos

Cost of goods sold, inventory, and purchases budget for the months of October and November:

October November

Sales $ 2,240,000 $ 2,379,000

Cost of goods sold 60% 1,344,000 1,427,400

Gross profit, 40% of sales $896,000 $951,600

Inventory Budget:

Ending Inventory $626,600 $639,110

Beginning Inventory $606,810 $626,600

Purchases Budget:

Ending Inventory $626,600 $639,110

Cost of goods sold 1,344,000 1,427,400

Cost of goods available for sale $1,970,600 $2,066,510

less Beginning Inventory $606,810 $626,600

Purchases $1,363,790 $1,439,910

Explanation:

a) Data and Calculations:

September October November December

Sales $ 2,009,000 $ 2,240,000 $ 2,379,000 $ 2,520,000

Cost of goods

sold 60% 1,205,400 1,344,000 1,427,400 1,512,000

Gross profit $803,600 $896,000 $951,600 $1,008,000

Ending Inventory $606,810 $626,600 $639,110 $651,800

Beginning Inventory $606,810 $626,600 $639,110

Purchases:

Ending Inventory $606,810 $626,600 $639,110 $651,800

Cost of goods

sold 1,205,400 1,344,000 1,427,400 1,512,000

Cost of goods available

for sale $1,812,210 $1,970,600 $2,066,510 $2,163,800

less Beginning Inventory $606,810 $626,600 $639,110

Purchases $1,363,790 $1,439,910 $1,524,690