Naftel Company sells lamps and other lighting fixtures. The purchasing department manager prepared the following inventory purchases budget. Naftel's policy is to maintain and ending inventory balance equal to 10 percent of the following month's costs of goods sold. April's budgeted cost of good sold is $75,000.
- Jan. Feb. Mar.
- Budgeted cost of goods sold $50,000 $54,000 $60,000
- Plus: Desired ending inventory $5,400 ? ?
- Inventory Needed 55,400 ? ?
- Less: Beginning Inventory 5,000 ? ?
- Required purchases (on account) 50,400 ? ?
Required:
A. Complete the inventory purchases budget by filling in the missing amounts.
B. Determine the amount of cost of goods sold the company will report on its pro forma income statement.
C. Determine the amount of ending inventory the company will report on its pro forma balance sheet at the end of the first quarter