Prepare budgeted income statement (Learning Objective 2)

The budget committee of Vinning Office Supply has assembled the following data.

As the business manager, you must prepare the budgeted income statements for May and June 2009.

a. Sales in April were $42,100. You forecast that monthly sales will increase 2.0% in May and 2.4% in June.

b. Vinning Office Supply maintains inventory of $9,000 plus 25% of sales budgeted for the following month. Monthly purchases average 50% of sales revenues in that same month. Actual inventory on April 30 is $14,000. Sales budgeted for July are $42,400.

c. Monthly salaries amount to $4,000. Sales commissions equal 4% of sales for that month. Combine salaries and commissions into a single figure.

d. Other monthly expenses are:

Prepare Vinning Office Supply’s budgeted income statements for May and June. Show cost of goods sold computations. Round all amounts to the nearest $100. (Round amounts ending in $50 or more upward and amounts ending in less than $50 downward.) For example, budgeted May sales are $42,900 ($42,100 X 1.02) and June sales are $43,900 ($42,900 X 1.024).

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Rent expense......... Depreciation expense Insurance expense. Income tax. $3,000, paid as incurred $600 $200, expiration of prepaid amount 20% of operating income