Exercise 21-20 (Part Level Submission) In May 2017, the budget committee of Gran

Question

Exercise 21-20 (Part Level Submission)

In May 2017, the budget committee of Grand Stores assembles the following data in preparation of budgeted merchandise purchases for the month of June.

1. Expected sales: June $512,200, July $620,600. 2. Cost of goods sold is expected to be 75% of sales. 3. Desired ending merchandise inventory is 30% of the following (next) month’s cost of goods sold. 4. The beginning inventory at June 1 will be the desired amount. Prepare the budgeted multiple-step income statement for June through gross profit. GRAND STORES Budgeted Income Statement Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Calculation of purchases for june: Particulars Amount Cost of goods sold (512200*0.75) 384150 Add: Closing stock (620600*0.75*0.30) 139635 Less: Opening stock (512200*0.75*0.30) 115245 Purchases for june 408540 Purchases for june is $408540 Calculation of gross profit Particulars Amount Sales 512200 Less: Cost of goods sold 384150 Gross profit 128050

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