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.

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

1. c

2. b

3. a

4. c

5. a

6. b

7. c

8. c

9.b

10. d

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