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 $501,200, July $617,100. 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. Collapse question part (a) Correct answer. Your answer is correct. Compute the budgeted merchandise purchases for June. (Round answers to the nearest whole dollar, e.g. 5,275.) GRAND STORES Merchandise Purchases Budget Entry field with correct answer Entry field with correct answer $Entry field with correct answer 375900 Entry field with correct answer: Entry field with correct answer Entry field with correct answer 138848 Entry field with correct answer Entry field with correct answer 514748 Entry field with correct answer: Entry field with correct answer Entry field with correct answer 112770 Entry field with correct answer $Entry field with correct answer 401978 Click if you would like to Show Work for this question: Open Show Work SHOW SOLUTION SHOW ANSWER LINK TO TEXT Attempts: 2 of 3 used Collapse question part (b) Prepare the budgeted multiple-step income statement for June through gross profit. GRAND STORES Budgeted Income Statement $ $

Answer 1

Required budgets are as prepared below:

GRAND STORES
Merchandise Purchases Budget
For the Month Ending June 30, 2017
Budgeted Cost of Goods Sold (501,200*75%)	375,900
Add:
Desired Ending Merchandise Inventory (30% of 617,100*75%)	138,848
Total Materials Required	514,748
Less
Beginning Merchandise Inventory (30% of 501,200*75%)	112,770
Required Merchandise Purchases	401,978
GRAND STORES
Budgeted Income Statement
For the Month Ending June 30, 2017
Expected Sales	501,200
Beginning Merchandise Inventory	112,770
Required Merchandise Purchases	401,978
Budgeted Cost of Goods Available for Sale	514,748
Desired Ending Merchandise Inventory	138,848
Cost of Goods Sold	375,900
Budgeted Gross Profit	125,300