Question

The budget committee of Sally's Suits​, an upscale​ women's clothing​ retailer, has assembled the following data. As the business​ manager, you must prepare the budgeted income statements for May and June.

Requirement

Prepare Sally's Suits budgeted income statements for May and June. Show cost of goods sold computations.

Sales in April were $50,000.You forecast that monthly sales will increase 10​% in May and an additional 55​% in June.
b.	Sally's Suits maintains inventory of $7,000 plus 30​% of the sales revenues budgeted for the following month. Monthly purchases average​ 50% of sales revenue in that same month. Actual inventory on April 30 is $23,500. Sales budgeted for July are $50,000.
c.	Monthly salaries amount to $3,000. Sales commissions equal 10​% of sales for that month. Combine salaries and commissions into a single figure.
d.	Other monthly expenses are as​ follows: Rent expense. . . . . . . . . . . . . $2,200, paid as incurred Depreciation expense. . . . . . $700 Insurance expense. . . . . . . . . $200, expiration of prepaid amount Income tax. . . . . . . . . . . . . . . 20% of operating income

Answer 1

Cost of goods sold	May	June
Beginning inventory	$          23,500	$          32,575
Purchases	$          27,500	$          42,625
Cost of goods available for sale	$          51,000	$          75,200
Ending inventory	$        (32,575)	$        (22,000)
Cost of goods sold	$          18,425	$          53,200

	May	June
Sales for may (50000+(50000*10%))	$        55,000
Sales for June (55000+(55000*55%))		$        85,250
Sales revenues	$        55,000	$        85,250
Following month's sales	$        85,250	$        50,000
30​% of the sales revenues	$        25,575	$        15,000
Add: $7000	$          7,000	$          7,000
Ending inventory	$        32,575	$        22,000
Sales revenues	$        55,000	$        85,250
Purchases (Sales revenues * 50%)	$        27,500	$        42,625

	May	June
Sales revenues	$        55,000	$        85,250
Sales commissions (Sales revenues * 10%)	$          5,500	$          8,525
Salaries expense	$          3,000	$          3,000
Salaries expense and Sales commissions	$          8,500	$        11,525

Income Statement	May	June
Sales revenue		$          55,000		$        85,250
Cost of goods sold		$          18,425		$        53,200
Gross profit		$          36,575		$        32,050
Operating expenses:
Salaries expense and Sales commissions	$             8,500		$         11,525
Rent expense	$             2,200		$            2,200
Depreciation expense	$                700		$               700
Insurance expense	$                200	$          11,600	$               200	$        14,625
Operating income		$          24,975		$        17,425
Income tax expense @ 20%		$             4,995		$          3,485
Net income (loss)		$          19,980		$        13,940