Coomb's Fashions forecasts sales of $125,000 for the quarter ended December 31. Its gross profit rate is 20% of sales, and its September 30 inventory is $32,500. If the December 31 inventory is targeted at $41,500, budgeted purchases for the fourth quarter should be:

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The budgeted purchases for the fourth quarter should be $109,000. This is calculated as follows:Budgeted purchases = (December 31 inventory - September 30 inventory) + (Cost of goods sold)Cost of goods sold = Sales x Gross profit rateCost of goods sold = $125,000 x 20% = $25,000Budgeted purchases = ($41,500 - $32,500) + $25,000 = $109,000

Coomb's Fashions Forecasts Sales of $125,000 for the Quarter Ended