Use the "Percent of Sales Method" of Preparing Pro Forma

question 49

Multiple Choice

Use the "percent of sales method" of preparing pro forma financial statements to determine the projection for next year's inventory.Make the following assumptions: current year's sales are $27,800,000; current year's cost of goods sold is $17,528,000; sales are expected to rise by 30%.The firm's investment in inventory in the current year is $5,890,200.What is the projection for next year's inventory?

• A) $7,657,260
• B) $6,981,250
• C) $5,845,500
• D) $4,526,600

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