“E22A-32 Preparing an operating budget Tremont, Inc. sells tire rims. Its sales
budget for the nine months ended September
30, 2014, follows:
Quarter Ended Nine-Month
Total
March 31 June 30 September 30
Cash sales, 20% $ 24,000 $ 34,000 $ 29,000
$ 87,000
Credit sales, 80% 96,000 136,000 116,000
348,000
Total sales $ 120,000 $ 170,000 $ 145,000 $
435,000

In the past, cost of goods sold has been
40% of total sales. The director of marketing
and the financial vice president agree that
each quarters ending inventory
should not be below $20,000 plus 10% of
cost of goods sold for the following
quarter. The marketing director expects
sales of $220,000 during the fourth quarter.
The January 1 inventory was $32,000.
Prepare an inventory, purchases, and cost of
goods sold budget for each of the first
three quarters of the year. Compute cost of
goods sold for the entire nine-month
period.E22A-32 Preparing an operating budgetTremont, Inc. sells tire rims. Its sales
budget for the nine months ended September30, 2014, follows:Quarter Ended Nine-MonthTotalMarch 31 June 30 September 30Cash sales, 20% $ 24,000 $ 34,000 $ 29,000
$ 87,000Credit sales, 80% 96,000 136,000 116,000
348,000Total sales $ 120,000 $ 170,000 $ 145,000 $
435,000In the past, cost of goods sold has been
40% of total sales. The director of marketingand the financial vice president agree that
each quarters ending inventoryshould not be below $20,000 plus 10% of
cost of goods sold for the followingquarter. The marketing director expects
sales of $220,000 during the fourth quarter.The January 1 inventory was $32,000.
Prepare an inventory, purchases, and cost ofgoods sold budget for each of the first
three quarters of the year. Compute cost ofgoods sold for the entire nine-month
period.”