In May 2020, the budget committee of Grand Stores assembles the following data in preparation of budgeted

Question:

In May 2020, 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 $500,000, July $600,000.

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.


Instructions

a. Compute the budgeted merchandise purchases for June.

b. Prepare the budgeted multiple-step income statement for June through gross profit.

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Financial and Managerial Accounting

ISBN: 978-1119392132

3rd edition

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

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