Question

Problem 23-5A

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 $803,000. Sales in June and July are expected to be 5% higher than the preceding month.
2. Cost of goods sold is expected to be 75% of sales.
3. Company policy is to maintain ending merchandise inventory at 10% of the following month’s cost of goods sold.
4. Operating expenses are estimated to be as follows:

Sales salaries $30,000 per month
Advertising 6 % of monthly sales
Delivery expense 2 % of monthly sales
Sales commissions 5 % of monthly sales
Rent expense $5,390 per month
Depreciation $910 per month
Utilities $710 per month
Insurance $560 per month

5. Interest expense is $2,000 per month. Income taxes are estimated to be 30% of income before income taxes.

[Partially correct answer.] Your answer is partially correct. Try again.

Prepare the merchandise purchases budget for each month in columnar form. (Round answers to 0 decimal places, e.g. 5,275.)

SUPPAR COMPANY
San Miguel Store
Merchandise Purchases Budget
[Entry field with correct answer]

For the Quarter Ended June, 2017
May and June, 2017
For the Months of May and June, 2017
May
June
[Entry field with correct answer]

Total
Direct Materials per Unit
Beginning Direct Materials
Total Materials Required
Units to be Produced
Budgeted Cost of Goods Sold
Beginning Merchandise Inventory
Desired Ending Direct Materials
Desired Ending Merchandise Inventory
Direct Materials Purchases
Required Merchandise Purchases
$
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$
[Entry field with incorrect answer]
[Entry field with correct answer]

Add
Less
:
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Direct Materials per Unit
Desired Ending Direct Materials
Required Merchandise Purchases
Direct Materials Purchases
Total
Desired Ending Merchandise Inventory
Total Materials Required
Units to be Produced
Beginning Direct Materials
Beginning Merchandise Inventory
Budgeted Cost of Goods Sold
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Direct Materials Purchases
Desired Ending Direct Materials
Direct Materials per Unit
Required Merchandise Purchases
Budgeted Cost of Goods Sold
Beginning Merchandise Inventory
Beginning Direct Materials
Total
Total Materials Required
Desired Ending Merchandise Inventory
Units to be Produced
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Add
Less
:
[Entry field with correct answer]

Total Materials Required
Total
Budgeted Cost of Goods Sold
Direct Materials per Unit
Desired Ending Direct Materials
Units to be Produced
Direct Materials Purchases
Beginning Direct Materials
Required Merchandise Purchases
Beginning Merchandise Inventory
Desired Ending Merchandise Inventory
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Direct Materials Purchases
Required Merchandise Purchases
Total
Total Materials Required
Units to be Produced
Beginning Direct Materials
Beginning Merchandise Inventory
Direct Materials per Unit
Budgeted Cost of Goods Sold
Desired Ending Direct Materials
Desired Ending Merchandise Inventory
$
[Entry field with incorrect answer]
$
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LINK TO TEXT

[Partially correct answer.] Your answer is partially correct. Try again.

Prepare budgeted multiple-step income statements for each month in columnar form. Show in the statements the details of cost of goods sold. (Round answers to 0 decimal places, e.g. 5,275.)

SUPPAR COMPANY
San Miguel Store
Budgeted Income Statement
[Entry field with correct answer]

For the Months of May and June, 2017
May and June, 2017
For the Quarter Ended June, 2017
May
June
[Entry field with correct answer]

Advertising
Gross Profit
Depreciation
Income Before Income Taxes
Beginning Inventory
Cost of Goods Available for Sale
Purchases
Income from Operations
Interest Expense
Rent
Sales Commissions
Sales
Sales Salaries
Income Tax Expense
Total Operating Expenses
Utilities
Cost of Goods Sold
Ending Inventory
Delivery
Insurance
Net Income / (Loss)
Operating Expenses
$
[Entry field with incorrect answer]
$
[Entry field with incorrect answer]
[Entry field with correct answer]

Income from Operations
Ending Inventory
Sales Commissions
Total Operating Expenses
Beginning Inventory
Income Tax Expense
Delivery
Cost of Goods Available for Sale
Cost of Goods Sold
Advertising
Insurance
Net Income / (Loss)
Rent
Operating Expenses
Purchases
Utilities
Gross Profit
Sales Salaries
Depreciation
Sales
Income Before Income Taxes
Interest Expense
[Entry field with correct answer]
    
Income Tax Expense    
Beginning Inventory    
Cost of Goods Sold    
Operating Expenses    
Delivery    
Depreciation    
Rent    
Utilities    
Sales Salaries    
Purchases    
Ending Inventory    
Income Before Income Taxes    
Gross Profit    
Insurance    
Interest Expense    
Advertising    
Cost of Goods Available for Sale    
Income from Operations    
Net Income / (Loss)    
Sales    
Sales Commissions    
Total Operating Expenses    
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]
    
Delivery    
Income from Operations    
Utilities    
Cost of Goods Available for Sale    
Sales Salaries    
Income Before Income Taxes    
Income Tax Expense    
Operating Expenses    
Depreciation    
Gross Profit    
Advertising    
Ending Inventory    
Interest Expense    
Beginning Inventory    
Insurance    
Purchases    
Cost of Goods Sold    
Net Income / (Loss)    
Rent    
Sales    
Sales Commissions    
Total Operating Expenses    
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]
    
Depreciation    
Delivery    
Cost of Goods Available for Sale    
Interest Expense    
Income from Operations    
Sales Commissions    
Total Operating Expenses    
Net Income / (Loss)    
Operating Expenses    
Beginning Inventory    
Income Before Income Taxes    
Ending Inventory    
Income Tax Expense    
Advertising    
Cost of Goods Sold    
Insurance    
Sales Salaries    
Rent    
Gross Profit    
Purchases    
Sales    
Utilities    
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]
    
Purchases    
Beginning Inventory    
Depreciation    
Gross Profit    
Total Operating Expenses    
Income from Operations    
Insurance    
Ending Inventory    
Income Tax Expense    
Net Income / (Loss)    
Operating Expenses    
Cost of Goods Available for Sale    
Rent    
Sales    
Sales Commissions    
Cost of Goods Sold    
Sales Salaries    
Delivery    
Utilities    
Income Before Income Taxes    
Interest Expense    
Advertising    
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]
    
Insurance    
Income Tax Expense    
Total Operating Expenses    
Net Income / (Loss)    
Utilities    
Operating Expenses    
Income from Operations    
Gross Profit    
Ending Inventory    
Purchases    
Income Before Income Taxes    
Depreciation    
Sales    
Delivery    
Rent    
Sales Commissions    
Sales Salaries    
Interest Expense    
Advertising    
Beginning Inventory    
Cost of Goods Available for Sale    
Cost of Goods Sold    
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Gross Profit
Beginning Inventory
Utilities
Income Before Income Taxes
Rent
Cost of Goods Available for Sale
Advertising
Ending Inventory
Depreciation
Interest Expense
Cost of Goods Sold
Income from Operations
Purchases
Operating Expenses
Delivery
Net Income / (Loss)
Income Tax Expense
Sales
Insurance
Sales Commissions
Sales Salaries
Total Operating Expenses
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Income Tax Expense
Net Income / (Loss)
Beginning Inventory
Total Operating Expenses
Ending Inventory
Sales Salaries
Cost of Goods Sold
Insurance
Operating Expenses
Interest Expense
Depreciation
Gross Profit
Sales
Sales Commissions
Rent
Income from Operations
Advertising
Utilities
Delivery
Cost of Goods Available for Sale
Purchases
Income Before Income Taxes
[Entry field with correct answer]
    
Total Operating Expenses    
Utilities    
Ending Inventory    
Income Before Income Taxes    
Purchases    
Income Tax Expense    
Sales Commissions    
Rent    
Beginning Inventory    
Gross Profit    
Interest Expense    
Delivery    
Sales Salaries    
Income from Operations    
Advertising    
Cost of Goods Available for Sale    
Depreciation    
Cost of Goods Sold    
Insurance    
Sales    
Net Income / (Loss)    
Operating Expenses    
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]
    
Purchases    
Interest Expense    
Income from Operations    
Cost of Goods Available for Sale    
Advertising    
Total Operating Expenses    
Beginning Inventory    
Income Tax Expense    
Operating Expenses    
Delivery    
Cost of Goods Sold    
Depreciation    
Utilities    
Rent    
Ending Inventory    
Net Income / (Loss)    
Sales Commissions    
Gross Profit    
Sales    
Insurance    
Sales Salaries    
Income Before Income Taxes    
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]
    
Sales Commissions    
Total Operating Expenses    
Purchases    
Rent    
Delivery    
Interest Expense    
Utilities    
Cost of Goods Sold    
Depreciation    
Income from Operations    
Sales    
Income Tax Expense    
Income Before Income Taxes    
Advertising    
Sales Salaries    
Insurance    
Gross Profit    
Beginning Inventory    
Cost of Goods Available for Sale    
Ending Inventory    
Net Income / (Loss)    
Operating Expenses    
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]
    
Cost of Goods Available for Sale    
Cost of Goods Sold    
Sales Salaries    
Delivery    
Total Operating Expenses    
Depreciation    
Beginning Inventory    
Interest Expense    
Ending Inventory    
Income Tax Expense    
Advertising    
Utilities    
Gross Profit    
Income from Operations    
Operating Expenses    
Purchases    
Net Income / (Loss)    
Insurance    
Rent    
Sales    
Income Before Income Taxes    
Sales Commissions    
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]
    
Advertising    
Total Operating Expenses    
Rent    
Cost of Goods Sold    
Sales Salaries    
Sales    
Depreciation    
Delivery    
Gross Profit    
Income from Operations    
Purchases    
Income Tax Expense    
Net Income / (Loss)    
Operating Expenses    
Cost of Goods Available for Sale    
Utilities    
Sales Commissions    
Insurance    
Interest Expense    
Beginning Inventory    
Income Before Income Taxes    
Ending Inventory    
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]
    
Sales    
Operating Expenses    
Depreciation    
Total Operating Expenses    
Net Income / (Loss)    
Insurance    
Sales Commissions    
Advertising    
Ending Inventory    
Purchases    
Delivery    
Sales Salaries    
Utilities    
Gross Profit    
Income Before Income Taxes    
Beginning Inventory    
Rent    
Interest Expense    
Cost of Goods Available for Sale    
Income from Operations    
Cost of Goods Sold    
Income Tax Expense    
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]
    
Ending Inventory    
Gross Profit    
Sales Commissions    
Net Income / (Loss)    
Rent    
Sales    
Sales Salaries    
Total Operating Expenses    
Cost of Goods Available for Sale    
Operating Expenses    
Insurance    
Income Tax Expense    
Utilities    
Interest Expense    
Advertising    
Income Before Income Taxes    
Cost of Goods Sold    
Beginning Inventory    
Delivery    
Depreciation    
Income from Operations    
Purchases    
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]
    
Advertising    
Net Income / (Loss)    
Beginning Inventory    
Cost of Goods Available for Sale    
Cost of Goods Sold    
Sales Commissions    
Sales Salaries    
Utilities    
Ending Inventory    
Income from Operations    
Total Operating Expenses    
Sales    
Income Before Income Taxes    
Gross Profit    
Delivery    
Income Tax Expense    
Depreciation    
Insurance    
Interest Expense    
Operating Expenses    
Purchases    
Rent    
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]
    
Delivery    
Depreciation    
Insurance    
Advertising    
Net Income / (Loss)    
Ending Inventory    
Operating Expenses    
Purchases    
Gross Profit    
Beginning Inventory    
Utilities    
Income from Operations    
Rent    
Income Tax Expense    
Sales Salaries    
Sales    
Sales Commissions    
Cost of Goods Available for Sale    
Total Operating Expenses    
Interest Expense    
Income Before Income Taxes    
Cost of Goods Sold    
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Cost of Goods Available for Sale
Net Income / (Loss)
Income from Operations
Utilities
Operating Expenses
Delivery
Income Before Income Taxes
Purchases
Depreciation
Interest Expense
Total Operating Expenses
Income Tax Expense
Rent
Advertising
Beginning Inventory
Insurance
Cost of Goods Sold
Ending Inventory
Gross Profit
Sales
Sales Commissions
Sales Salaries
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with incorrect answer]

Income Before Income Taxes
Rent
Cost of Goods Sold
Sales Commissions
Net Income / (Loss)
Advertising
Delivery
Interest Expense
Sales Salaries
Sales
Beginning Inventory
Depreciation
Total Operating Expenses
Income Tax Expense
Income from Operations
Cost of Goods Available for Sale
Ending Inventory
Gross Profit
Utilities
Operating Expenses
Insurance
Purchases
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with incorrect answer]

Net Income / (Loss)
Rent
Operating Expenses
Purchases
Depreciation
Sales
Utilities
Beginning Inventory
Income Before Income Taxes
Insurance
Sales Commissions
Sales Salaries
Ending Inventory
Total Operating Expenses
Interest Expense
Cost of Goods Available for Sale
Cost of Goods Sold
Delivery
Gross Profit
Advertising
Income from Operations
Income Tax Expense
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with incorrect answer]

Advertising
Gross Profit
Beginning Inventory
Net Income / (Loss)
Ending Inventory
Operating Expenses
Delivery
Depreciation
Income from Operations
Sales Commissions
Cost of Goods Available for Sale
Insurance
Purchases
Rent
Cost of Goods Sold
Income Tax Expense
Sales
Sales Salaries
Total Operating Expenses
Utilities
Income Before Income Taxes
Interest Expense
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with incorrect answer]

Utilities
Beginning Inventory
Gross Profit
Interest Expense
Total Operating Expenses
Income from Operations
Cost of Goods Available for Sale
Income Before Income Taxes
Net Income / (Loss)
Advertising
Sales Commissions
Sales Salaries
Sales
Cost of Goods Sold
Delivery
Income Tax Expense
Depreciation
Ending Inventory
Insurance
Operating Expenses
Purchases
Rent
$
[Entry field with incorrect answer]
$
[Entry field with incorrect answer]

Answer 1

	Month	May	June	July
	Sales	$ 803,000.00	803000*(1.05)=$843150	843150*(1.05)=$885307.50
	COGS(75% of sales)	$ 602,250.00	$                           632,362.50	$                               663,980.63
	Ending Inventory
	May=($632362.5*10%)	$    63,236.25
	June=($663980.63*10%)	$    66,398.06
	Begnning Inventory of May=($602250*10%)	$    60,225.00
		Suppar Company
		San Migual Store
		Merchandise Purchase Budget
		May	June
	Sales	$ 803,000.00	$                           843,150.00
	Cost of goods sold=(A)	$ 602,250.00	$                           632,362.50
	Add: Ending Inventory=(B)	$    63,236.25	$                             66,398.06
	Total Needs=(C )=(A)+(B)	$ 665,486.25	$                           698,760.56
	Less: Beginning Inventory=(D)	$    60,225.00	$                             63,236.25
	Merchandise Purchased=(E )=(C )-(D )	$ 605,261.25	$                           635,524.31
		Suppar Company
		San Migual Store
		Budgeted Income Statement for May and June
		May	June
	Sales=(A)	$ 803,000.00	$                           843,150.00
	Cost of goods sold=(B)	$ 602,250.00	$                           632,362.50
	Gross Profit=(C )=(A)-(B)	$ 200,750.00	$                           210,787.50
	Operating Expenses
	Sales Salaries	$    30,000.00	$                             30,000.00
	Advertising(Sales*6%)	$    48,180.00	$                             50,589.00
	Delivery Expense(Sales *2%)	$    16,060.00	$                             16,863.00
	Sales Commission(Sales*5%)	$    40,150.00	$                             42,157.50
	Rent Expense	$      5,390.00	$                               5,390.00
	Deprecation	$          910.00	$                                   910.00
	Utilites	$          710.00	$                                   710.00
	Insurance	$          560.00	$                                   560.00
	Interest Expense	$      2,000.00	$                               2,000.00
	Total Operating Expenses=(D)	$ 143,960.00	$                           149,179.50
	Income before income tax=(E )=(C )-(D)	$    56,790.00	$                             61,608.00
	Income Tax=(F )=(E )*30%	$    17,037.00	$                             18,482.40
	Net Income after tax=(G)=(E )-(F)	$    39,753.00	$                             43,125.60
	Working
		May	June
	Advertisement Expenses	($803000*6%)	($843150*6%)
	Delivery Expenses	($803000*2%)	($843150*2%)
	Sales Commission	($803000*5%)	($843150*5%)
	Income Tax	($56790*30%)	($61608*30%)