In May 2014, 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 income statement for June through gross profit.

AppendixLO1