Emerald Corporation has the following information: $\begin{array}{ll}
\text { Month } & \text { Budgeted Sales } \
\text { May } & \$ 46,000 \
\text { June } & 50,000 \
\text { July } & 52,000 \
\text { August } & 48,000
\end{array}$ The cost of goods sold percentage is 65% and the desired inventory level is 25% of next month's sales was the beginning inventory for May.

Question

Quizplus · Accepted Answer

The desired ending inventory for May is 25% of June's sales, which is $50,000 * 25% = $12,500. The cost of goods sold for May is $46,000 * 65% = $29,900. The beginning inventory for May is $12,500 (since it is 25% of June's sales). Therefore, the purchases for May are calculated as: Purchases = (Cost of Goods Sold + Ending Inventory - Beginning Inventory) = ($29,900 + $12,500 - $12,500) = $29,900. The correct choice is $7,475, which is the difference between the calculated purchases and the given options.

Emerald Corporation Has the Following Information The Cost of Goods Sold Percentage Is 65% and the