The budget committee of Suppar Company collects the following data for its San M

Question

The budget committee of Suppar Company collects the following data for its San Miguel Store in preparing budgeted income statements for May and June 2017 1. 2. 3. 4. Sales for May are expected to be $800,000. Sales in June and July are expected to be 5% higher than the preceding month Cost of goods sold is expected to be 75% of sales Company policy is to maintain ending merchandise inventory at 10% of the following month's cost of goods sold Operating expenses are estimated to be as follows: Sales salaries Advertising Delivery expense Sales commissions Rent expense Depreciation Utilities Insurance $35,000 6 % 2 % 5 % per month of monthly sales of monthly sales of monthly sales $5,000 per month $800 per month $600per month $500 per month 5. Interest expense is $2,000 per month. Income taxes are estimated to be 30% of income before income taxes

Explanation / Answer

a) Prepare merchandise purchase budget :

May June Cost of goods sold 800000*75%=600000 800000*1.05*75%=630000 Add; Desired ending inventory 630000*10%=63000 661500*10%=66150 Total 663000 696150 Less: Beginning inventory (60000) (63000) Merchandise purchase 603000 633150

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.