Question
Asked Nov 13, 2019
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Coronet Company provided the following information related to its inventory sales and purchases for December 2013 and the first quarter of 2014
Feb. 2014
Dec. 2013
Jan. 2014
Mar. 2014
(Budgeted)
(Actual)
(Budgeted)
(Budgeted)
Cost of goods
sold
$88,000
$68,000
$38,000
$58,000
Desired ending inventory levels are 26% of the following month's projected cost of goods sold. Budgeted purchases of inventory in February 2014 would be:
Multiple Choice
$65,800
$80,200.
$87,700.
$108,040
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Coronet Company provided the following information related to its inventory sales and purchases for December 2013 and the first quarter of 2014 Feb. 2014 Dec. 2013 Jan. 2014 Mar. 2014 (Budgeted) (Actual) (Budgeted) (Budgeted) Cost of goods sold $88,000 $68,000 $38,000 $58,000 Desired ending inventory levels are 26% of the following month's projected cost of goods sold. Budgeted purchases of inventory in February 2014 would be: Multiple Choice $65,800 $80,200. $87,700. $108,040

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Expert Answer

Step 1

The equation for material inventory is Opening Stock+Purchases=Cost of goods sold+closing Inventory

So, Purchases= Cost of goods sold+closing Inventory-Opening stock

Step 2

The computation of closing inventory, opening inventory and...

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Cost of goods sold Add: Ending inventory 26%*X next month cost og goods 38,000 68,000 88000 58,000 For Dec Ending inventory=68,00 *26% ; January=88,000*26%; February 58000*26% sold 17680 22880 15080 Less. Opening stock -17680 -22880 -15080 Purchases 73,200 80,200

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