# Pinsetters Supply is a merchandiser of three different products. The companys February 28 inventories are footwear, 15,500 units; sports equipment, 70,000 units; and apparel, 40,000 units. Management believes that excessive inventories have accumulated for all three products. As a result,

Pinsetterâ€™s Supply is a merchandiser of three different products. The companyâ€™s February 28 inventories are footwear, 15,500 units; sports equipment, 70,000 units; and apparel, 40,000 units. Management believes that excessive inventories have accumulated for all three products. As a result, a new policy dictates that ending inventory in any month should equal 40% of the expected unit sales for the following month. Expected sales in units for March, April, May, and June follow.

Required
1. Prepare a merchandise purchases budget (in units) for each product for each of the months of March, April, and May.
Analysis Component
2. The purchases budgets in part 1 should reflect fewer purchases of all three products in March compared to those in April and May. What factor caused fewer purchases to be planned? Suggest business conditions that would cause this factor to both occur and impact the company in thisway.

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...

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Related Book For

## Fundamental Accounting Principles

ISBN: 978-0078110870

20th Edition

Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta

Question Details
Chapter # 23
Section: Problem Set A
Problem: 1
Posted Date: December 26, 2012 08:24:34