In May 2012, the budget committee of Big Jim Stores assembles the following data for preparing the merchandise purchases budget for the month of June:
1. Expected sales: June $560,000; July $600,000.
2. Cost of goods sold is expected to be 65% of sales.
3. Desired ending merchandise inventory is 40% of the following month's cost of goods sold.
4. The beginning inventory at June 1 will be the desired amount.
Instructions
(a) Calculate the budgeted merchandise purchases for June.
(b) Prepare the budgeted income statement for June through gross profit on sales?