Answer and  Explanation:
The preparation is presented below:
               Outdoor Company
        Inventory, Purchases, and Cost of Goods Sold Budget  Â
       Two months Ended January 31 and February 28
Particulars        January      February March
Sales in units     7,500 units    2,500 units  4,700 units
Sales price     $175         $195        $270
Sales in dollars $1,312,500 Â Â Â $487,500 Â Â Â $1,269,000
Percentage of cost of goods sold 60% Â 60% 60%
Cost of goods sold $787,500 Â Â Â $292,500 $761,400
Add: Desired ending merchandise inventory $185,500 466,840
  ($292,500 × 60% + $10,000)     ($761,400 × 60% + $10,000)
Total merchandise inventory required $973,000 Â $759,340
Less: Beginning merchandise inventory $482,500 Â $185,500
            ($787,500 × 60% + $10,000)
Budgeted purchases $490,500 Â $573,840
The ending inventory of month of Jan should be beginning inventory of Feb and the same is shown above
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