In: Accounting
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. sales for may are expected to be 800,000. sales in June and July are expected to be 5% higher than the preceeding month.
2. Cost of good sold is expecte to be 70% of sales
3. Company policy is to maintain ending merchandise inventory at 10% of the following months cost of goods sold.
4. Operating expenses are estimated to be as follows:
sales |
35,000 per month |
advertising | 6% of monthly sales |
delivery expense | 2% of monthly sales |
sales commission | 5% of monthly sales |
rent expense | 5,000 per month |
depreciation | 800 per month |
utilites | 600 per month |
insurance | 500 per month |
interest expense is 2,000 per month. Income taxes are estimated to be 30% of income before income taxes.
a) prepare the merchandise purchases budget for each month in columnar form.
b) prepare budgeted multiple-step income statements for each month in columnar form. Show in the statements the details of cost of good sold.