In May 2020, the budget committee of Big Jim Stores assembles the following data for preparing the merchandise purchases budget for the month of June:

Prepare a purchases budget and budgeted income statement for a merchandiser.

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 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.