Sentra Sporting Company Sells Tennis Rackets and Other Sporting Equipment

question 23

Multiple Choice

Sentra Sporting Company sells tennis rackets and other sporting equipment. The purchasing department manager prepared the inventory purchases budget. Sentra's policy is to maintain an ending inventory balance equal to 15% of the following month's cost of goods sold. January's budgeted cost of goods sold is $70,000. $\begin{array}{lccc}&\text { October}&\text { November }&\text { December }\\\text { Budgeted cost of goods sold } & 60,000 & 40,000 &50,000\\\text { Plus: Desired ending inventory } & 6,000 & ?&? \\\text { Inventory needed } &66,000& ? &? \\\text { Less: Beginning inventory } & 9,000 & ?&? \\\text { Required purchases (on account) } & 57,000 & ? & ? \end{array}$


-What is the amount of ending inventory that the company will report on its pro forma balance sheet?

• A) $7,500
• B) $10,500
• C) $35,300
• D) $60,500

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