The budget committee of Berg Office Supply has assembled the following data. As
ID: 2472919 • Letter: T
Question
The budget committee of Berg Office Supply has assembled the following data. As the
business manager, you must prepare the budgeted income statements for May and June 2011.
Sales in April were $50,000. You forecast that monthly sales will increase 2.0% in May and 2.4% in June.
Clipboard maintains inventory of $9,000 plus 25% of the sales revenue budgeted for the following month. Monthly purchases average 50% of sales revenue in that same month. Actual inventory on April 30 is $13,000. Sales budgeted for July are $65,000.
Monthly salaries amount to $3,000. Sales commissions equal 4% of sales for that month. Combine salaries and commissions into a single figure.
Other Monthly expenses are:
Rent Expense $2,600, paid as incurred
Depreciation expense $300
Insurance expense $200, expiration of prepaid amount
Income Tax 20% of operating income
Requirement
1.
Prepare Berg's budgeted income statements for May and June. Show cost of goods sold
computations.
Requirement 1
Before completing the budgeted income statements, calculate the budgeted cost of goods
sold for May and June using the inventory, purchases, and cost of goods sold budget form.
May
June
Beginning inventory
+ Purchases
= Goods available for sale
- Ending inventory
= Cost of goods sold
Now complete the budgeted income statements for May and June.
Berg Office Supply
Budgeted Income Statements
May and June 2011
May
June
Sales revenue
Cost of goods sold
Gross profit
Operating expenses:
Salaries & commission expense
Rent expense
Depreciation expense
Insurance expense
Operating income
Income tax expense
Net income
The budget committee of Berg Office Supply has assembled the following data. As the
business manager, you must prepare the budgeted income statements for May and June 2011.
Sales in April were $50,000. You forecast that monthly sales will increase 2.0% in May and 2.4% in June.
Clipboard maintains inventory of $9,000 plus 25% of the sales revenue budgeted for the following month. Monthly purchases average 50% of sales revenue in that same month. Actual inventory on April 30 is $13,000. Sales budgeted for July are $65,000.
Monthly salaries amount to $3,000. Sales commissions equal 4% of sales for that month. Combine salaries and commissions into a single figure.
Other Monthly expenses are:
Rent Expense $2,600, paid as incurred
Depreciation expense $300
Insurance expense $200, expiration of prepaid amount
Income Tax 20% of operating income
Explanation / Answer
Berg Office supply COGS Calculation Details April May June July Sales 50,000 51,000 52,224 65,000 Required purchase @50% of sale 25,500 26,112 Add Required ending inventory 22,056 25,250 Less Opening Inventory (13,000) (22,056) Net Cost of Goods Sold 34,556 29,306 Budgeted Income Statement Month May & June 2011 May June Sales Revenue 51,000 52,224 Cost of Goods Sold 34,556 29,306 Gross Profit 16,444 22,918 Operating Expenses Salaries & Commission Expenses 5,040 5,089 Rent Expenses 2,600 2,600 Depreciation Expenses 300 300 Insurance Expenses 200 200 Operating Income 8,304 14,729 Income Tax Expense 1,661 2,946 Net Income 6,643 11,783
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